A recovery in risk appetite and slight upward revision in the year-on-year first-quarter eurozone GDP figure helped the euro strengthen against the US dollar this morning.

‘The market is probably being driven by risk appetite,’ said Geoffrey Yu of UBS. ‘Any support for the euro is likely to be short-lived. Our view is that the overall fundamentals remain supportive of the dollar.’ Figures from Eurostat showed that EU GDP grew 0.6% from a year ago in the first quarter, up from a preliminary estimate of 0.5%. From the fourth-quarter GDP expanded by 0.2%, however, unchanged from a previous forecast. Data from the eurozone government bond market suggests that the region’s debt crisis is intensifying. Spanish government bonds yields climbed to their highest level in more than a year earlier today and Italian government bond yields rose to their highest level since July, meaning investor demand for their debt is weakening. This will ultimately make it more expensive for governments to roll over debt and issue funds from the bond market. ‘Eurozone government bond yields are rising because there is a realisation that the Greek crisis is not going away’, said Harvinder Sian of Royal Bank of Scotland. ‘Greece will likely face a managed default, which then prompts concerns that other countries such as Spain and Portugal will have to go down the same route.