European leaders, along with President Volodymyr Zelenskyy, are meeting in Brussels for a special summit focusing on an 800 billion euro ($844 billion) defense spending increase as the United States suspended aid to Ukraine and signaled Europe must play a bigger role in its own security.

The euro rebounded on Monday as hopes for a Ukraine peace deal improved, and interest rate differentials moved against the dollar ahead of a possibly pivotal steer on U.S. economic growth in the February payrolls report late in the week.

EU chief Ursula von der Leyen Tuesday presented a plan to mobilise some 800 billion euros ($843 billion) for Europe's defence -- and help provide "immediate" military support for Ukraine

The euro stands ready to benefit from any reassessment of reserve currencies by the world’s central banks as Europe grows more united over the need to fund its own defense, according to analysts at UBS Investment Bank,

Charu Chanana, chief investment strategist at Saxo, says the euro rally is "just getting started" as investors see a "massive turnaround" in Europe's policy stance. She also shares her outlook for the US economy on Television.

The euro rose to its strongest this year versus the dollar as the wall of cash headed for Europe’s defense industry prompts analysts to drop forecasts for parity between the two currencies.

Wall Street struggled for traction on Monday, ending mixed after slumping last week, while German election results buoyed German shares and Europe's single currency as investors waited for midweek results from artificial intelligence chip leader Nvidia.

An election win for Germany's conservatives has eased concerns of political gridlock in Europe's biggest economy, though it failed to lift uncertainty around whether a new government can deliver fiscal reforms that would boost sluggish growth.

The market reaction has been relief at the election of the relatively mainstream CDU/CSU conservatives in Germany's election, with DAX futures now up 1.4% after a slow start. The euro has added 0.5% to a one-month high at $1.