The euro has strengthened against the United States dollar after economic data showed that the Germany economy grew in the first quarter of 2013, while a separate report showed that business confidence in Eurozone’s largest economy sharply improved in May.

A report released earlier showed German economy was confirmed to have grown 0.1 percent in the first quarter of 2013, following the 0.7 percent contraction reported in the fourth quarter of 2012.

Adding to the sense of optimism, Munich based IFO economic research institute said Its German business confidence data took economists by surprise as it rose unexpectedly in May. IFO Business Climate gauge rose to 105.7 from 10.4 a month earlier, IFO Current Assessment also jumped to 110.0 from a revised 107.3 in April.

The EURUSD pair rose to $1.2959, from an opening at $1.2931, after hitting a high of $1.2992, and a low of $1.2903.

The general trend over short term basis is to the downside targeting 1.2560 as far as areas of 1.3270 remains intact.

Dollar headed for its biggest daily drop in more than five weeks against the Japanese yen after Kuroda said on Friday the Bank of Japan (BOJ) will implement flexible money-market operations as he aims to ease volatility in bond markets.

The yen rose for a second day against the dollar and also rallied against the euro after the 10-year Japanese government bonds yields jumped to 1.000 percent, the highest in a year.

The USDJPY pair is currently trading around ¥101.39 while recording the highest level of ¥102.58 and lowest levels of ¥101.07. The trading range for today is among key support at 100.00 and key resistance at 102.80.

EURJPY pair is currently trading at 131.41 after opening at 131.89 having so far set a high of 132.55 and a low of 130.68.

Concerns that U.S. monetary stimulus could be scaled back, sparked by Federal Reserve Chairman Ben Bernanke`s testimony on Wednesday, also weighed on the yen. However, market`s reaction to Bernanke might be short-lived as some officials said the bank was not ready yet to pull stimulus.

the Federal Reserve Bank of St. Louis president James Bullard, said on Thursday that he did not think the Fed was "that close" to start winding down its support unless the economy continued to improve and inflation picks up.

The USDIX which tracks the dollar movements versus a basket of major currencies fell on Friday to trade around 83.64 from the session’s opening of 83.92 after hitting a high of 84.02 and a low of 83.51.  

North Korea agreed to return to nuclear talks to ease tensions with China, the Chinese state media reported.

Pyongyang`s special envoy led by military official Choe Ryong Hae offered to renew nuclear disarmament talks.

Tensions between the two longtime allies started increasing after Pyongyang ignored China’s warnings not to carry out February’s nuclear test.

Choe’s visit marked the first visit to China by a high-level North Korean since August last year.

“The relationship is rocky so they will try to mend the relationship. Second, they also want to improve relations with the US and need China to be their intermediary”, said Professor Cui Yingjiu.

European Central Bank (ECB) President Mario Draghi said that more involvement from the euro area was the solution to resolving the debt crisis, calling on governments to take steps to improve their own finances, according to his speech in london on Thursday.

In his speech at a gala dinner in London yesterday, the head of European Central Bank Mario Draghi, has urged governments to push on with reforms and banking union plans, while he added that the euro area is more stable than a year ago, yet challenges remain.

"The crisis that we are facing today is much more multi-faceted and that means that the policy response must also be much more multi-faceted and must involve a variety of institutions," Draghi said.

While regarding talks over a potential U.K. referendum on membership of the European Union (EU), ECB’s Draghi said there was a need for mutual cooperation and said that people should keep in mind the "depth of the interconnection" between the U.K. and Europe.

"What I can say is that Europe needs a more European U.K. as much as the U.K. needs a more British Europe," Draghi added.

U.K. Prime Minister, David Cameron, has promised to renegotiate its role within the EU and hold a referendum on membership before the end of 2017, should his Conservative Party win the next general election.

Furthermore, Draghi hailed efforts made by the governments of Europe’s weaker economies where he pointed that Ireland, Spain and Portugal had made "impressive" improvements in their export performances.

Draghi also said that his pledge to buy government bonds is ensuring that interest-rate cuts reach the parts of the euro-area economy that need them the most.

Russia said on Friday that the Syrian government had agreed in principle to attend the international peace conference.

“Damascus has expressed its readiness in principle to participate in the international conference in order for Syrians themselves to find a political path to a solution”, said Russian Foreign Ministry spokesman Alexander Lukashevich.

Yet, the Syrian Deputy Foreign Minister Faisal Mekdad said his country will decide soon whether to take part in the conference or not.

The international peace conference, proposed by Russia and the United States, aims at bringing government and opposition representatives together for talks.