Euro strengthens

TOKYO: The euro hit a two-month high versus the dollar and held firm against other major currencies on Monday thanks to strong German business confidence and reduced anxiety about political instability in Europe´s biggest economy.
The euro fetched $1.1929, little changed from late U.S. levels last week after having hit a high of $1.1946, its highest level in two months.
The common currency now faces a test at $1.1965. That level is the 76.4 percent retracement of its decline from a 2 1/2-year peak of $1.2092 touched on Sept 8 to a 3-1/2-month low of $1.1553 set on Nov 7. It has gained 3.2 percent from that low.
The euro rose to 133.24 yen, its highest since Nov 16 and it firmed on the British pound to 0.8978 pound , edging to near this month´s peak of 0.9014.The German business confidence index compiled by the Ifo economic institute hit a record high in November, in another sign of strong growth in the euro zone´s largest economy.
The upbeat data was followed by positive political developments after German Chancellor Angela Merkel - whose chances for a fourth term were plunged into doubt a week ago when three-way coalition talks with the pro-business Free Democrats (FDP) and Greens collapsed - was handed a political lifeline by the Social Democrats (SDP).