The euro traded at record levels against the yen on Monday in anticipation of positive news on the German economy.

At its peak, the euro was 166.12 against the yen, before dropping down slightly to 165.91 at the close of New York trading.

The euro also traded strongly with the US dollar, reaching a two-week high of $1.3437 before levelling out to $1.3429 when American trading finished.

Economists are predicting that a report on the German economy to be released on Tuesday by the ZEW Center for European Economic Research will contain positive forecasts.

"The euro is shining,'' Michiyoshi Kato, a senior vice president of currency sales at Mizuho Corporate Bank told Bloomberg, adding: "I am bullish on the euro."

The euro was also bolstered by speculation that the European Central Bank will keep interest rates high to curb borrowing and inflation.