The Dollar Index is trading sharply higher as the Dollar is gaining against the European currencies following reports of problems with the Greek bailout package.

Stocks are trading higher overnight on the prospects of a global economic recovery following the release of better than expected European and Chinese manufacturing reports. The rally started overnight in Japan when the Nikkei average rose fueled by the weaker Yen. Talk that Japanese investors will seek better returns in foreign markets helped support the U.S. equity markets.

The stronger Euro is helping to boost demand for higher risk assets, underpinning global equity markets overnight. U.S. equity indices finished last week higher, but the markets looked tired as the week-ended. The stronger Euro is encouraging investors to ignore last week’s action and instead turn their focus on the better returns being offered by equity markets.

On Tuesday, the Federal Reserve left its benchmark interest rate unchanged and reiterated that interest rates would remain low for “an extended period”. In its statement, it also mentioned that inflation remains subdued, and that the weak employment situation seems to have stabilized.