The biggest three-day rally in the euro in over two years has sent analysts scrambling to rewrite their forecasts for the currency, as a surge in European spending and signs of a weakening U.S. economy dampens chatter about a fall to $1.

Germany's plans to go on its biggest public spending spree in 35 years will likely lead to higher borrowing costs across the euro zone – and that's a good thing.

The euro hit a fresh year-to-date high versus the greenback amid renewed bets that a ramp-up in European defense spending will provide a much-needed boost to the region’s economy.

The combination of continued growth concerns in the US and the fiscal/defense initiatives in Europe saw the dollar fall every day last week.

It remains to be seen how far President Trump’s embrace of Russia and abandonment of traditional allies will go. But “the West” may be gone.

The chief of the European Union's executive proposes an 800 billion euro ($841 billion) plan to beef up EU defenses to lessen the impact of potential U.S. disengagement and provide Ukraine with military muscle to negotiate with Russia following the freeze of U.

The euro extended its gains and was last up 0.28% at $1.082, having traded at $1.0797 earlier, while government bond yields edged up. Germany's two-year bond yield traded at 2.25%, versus 2.22% just before the decision, while Italian bond yields edged up. European stocks were last down 0.6%.

The euro rebounded from a 2-1/2-week low against the U.S. dollar on Monday and sterling also advanced with Europe taking the lead in a renewed push for peace in Ukraine. The Canadian dollar and Mexico peso rose after U.

The euro edged higher after the European Central Bank cut interest rates but signaled it could move cautiously with further easing. The euro rose 0.3% to $1.082. It had been flat

Inflation in Europe eased to 2.4% in February, supporting the case for another interest rate cut from the European Central Bank but leaving open how far the central bank will go in lowering borrowing costs.

European markets were lower Tuesday with all eyes on U.S. President Donald Trump’s import tariffs going into effect.