The euro rallied to a seven-week high against the dollar after European leaders agreed to an expansion of a rescue fund for indebted nations and reached an accord with lenders on writedowns for Greek debt. The euro rose after European leaders meeting yesterday for the second time in four days persuaded bondholders to take 50 percent losses on Greek debt and boosted the firepower of a rescue fund for indebted nations to 1 trillion euros ($1.4 trillion), responding to global pressure. Yields on Italian 10-year bonds were up 34 basis points this month after dropping five basis points to 5.87 percent today. Spain’s yields decreased 15 basis points to 5.33 percent, paring its monthly advance to 19 basis points.

The yen rose to a record versus the dollar for the fourth time in five days day on speculation Bank of Japan measures announced today will fail to contain the currency’s rally. The yen strengthened even after the Bank of Japan expanded its credit and asset-purchase programs to a total of 55 trillion yen ($724 billion) from 50 trillion yen to damp the currency’s appreciation, which harms exporters. It also kept the overnight lending rate at zero to 0.1 percent.

IntercontinentalExchange Inc.’s Dollar Index, used to track the greenback against the currencies of six major U.S. trading partners including the euro and yen, decreased 1.6 percent to 75.014 on reduced demand for a refuge. It was below its 200-day moving average for the first time since

The pound fell to a seven-week low against the euro after European Union leaders agreed to expand a rescue fund for indebted nations, damping demand for the perceived safety of the British currency. Sterling weakened versus all but three of its 16 major counterparts as Bank of England Markets Director Paul Fisher said the U.K. economy may be shrinking. Gilts declined after EU leaders meeting in Brussels yesterday said their plan points the way out of the sovereign debt crisis, reducing appetite for safer assets. U.K and European stocks gained.