Dollar steadily lost ground during the Asian and early European sessions today as bargain hunting and short covering helped drive both the euro and pound higher. After coming close, but failing to take out the psychologically important 1.2500 level yesterday, EUR/USD catapulted higher on a buy recommendation by US investment bank that cited excessive bearishness in the EZ and the Eastern European economies.

The KOF index of Leading indicators printed at -0.87 versus expectations of -0.53 and far lower than -0.39 the month prior as the Swiss economy continued to deteriorate feeling the squeeze from both the slumping manufacturing exports and the reeling finance sector that saw many of the country’s leading banks suffer record losses in the past year.