The euro has soared to an almost two-year high against the dollar, as investors see the U.S. economy stagnate, while Europe gradually emerges from recession.

The euro reached $1.3832 Friday, its loftiest level since November 2011. That represents a 7.5 percent gain since July 8.

Recent U.S. data look sluggish, with the economy adding only 148,000 jobs in September.
Meanwhile, the eurozone economy grew at a 0.3 percent quarterly pace in the second quarter (about 1.3 percent annualized).

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

That lags far behind the U.S. annualized rate of 2.5 percent for the second quarter. But Europe improved from a quarterly contraction of 0.2 percent in the first quarter.

Worries have eased about Europe's debt burden since the European Central Bank's pledge in July 2012 to protect eurozone bond markets, The Wall Street Journal reports.

Market participants are now willing to jump back into high-yield countries such as Spain and Italy, according to the paper.

"Investors feel a lot more at ease with the situation in Europe," Peter Wilson, a bond portfolio manager at First International Advisors, told The Journal.

Spain and Italy "represent reasonable value in the current interest-rate environment," he said.

Some investors say the Federal Reserve's hesitance to taper its quantitative easing will push the dollar even lower.

"We are still seeing a gradual weakening of the dollar, reflecting people pushing back their expectations for the Fed tapering,” Lee Hardman, a currency strategist at Bank of Tokyo-
Mitsubishi UFJ, told Bloomberg. "Heading into year end, given that the Fed looks unlikely to begin tapering this year, there’s some scope for further downside in the dollar."

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

Related Stories:

Euro Rally Could Put Brake on Recovery

Euro May Text 2013 High, Credit Suisse Says