During U.S. morning trade, the euro hit session highs against the dollar, with EUR/USD rising 0.19% to 1.3292.
Investor sentiment was boosted after the White House confirmed that President Obama is in talks with France and Britain about getting a United Nations resolution to hold Syria to its apparent commitment to place its chemical weapons under international control.
President Obama said he would put plans for a military strike against Syria on hold if the country agrees to relinquish its chemical weapons stockpile.
Risk appetite was also underpinned after a recent string of upbeat economic data from China indicated that the world’s second largest economy is recovering from a slowdown.
The pound was trading close to its highest level since February against the dollar, with GBP/USD up 47% to 1.5805.
Sterling strengthened after official data showed that the rate of unemployment in the U.K. ticked down to 7.7% in the three months to July from 7.8% in the previous three months.
Economists had expected the unemployment rate to remain unchanged.
The data fuelled expectations that the Bank of England may raise interest rates sooner than it has indicated.
Last month, the BoE pledged to keep interest rates on hold at current record low levels until the unemployment rate falls below 7%, something that bank does not see for another three years.
The number of people claiming unemployment benefits in the U.K. fell by 32,600 in August, better than expectations for a decline of 22,000 people.
The dollar slipped lower against the yen but remained supported close to two-month highs, with USD/JPY down 0.36% to 100.01.
The dollar was also weaker against the Swiss franc, with USD/CHF sliding 0.39% to 0.9312.
Elsewhere, the greenback was mixed against its Australian, New Zealand and Canadian counterparts, with AUD/USD dipping 0.04% to 0.9309, NZD/USD inching up 0.03% to 0.8069 and USD/CAD slipping 0.08% to 1.0340.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.25% to 81.61.