The euro pushed back above the 1.21 usd mark on news that German investor confidence has risen to its highest level in two years. The ZEW research institute said its German economic expectations index for January rose by 9.4 points to +71.0 points from +61.6 in December and expectations of a far more modest rise to +63.3. "The resolution of some of the uncertainties surrounding the new German government, the drop in energy prices as well as the strength of German equities helped to boost confidence and close the gap with the IFO index," said Mitul Kotecha, global head of currency research at CALYON Today's headline number was the highest since January 2004 and echoes findings elsewhere that Germany, the single currency zone's biggest economy is enjoying some solid economic growth A raft of strong economic data out of Germany in recent months has helped alter market expectations about the likely path of euro zone interest rates, and prompted renewed buying of the euro There is now a growing market view that the yield-supporting factors that helped the dollar rally may have run their course, especially with the European Central Bank poised to raise borrowing costs again in the months to come, given the strong data flow emerging from the 12-nation single currency zone In early December, the central bank raised its key refi rate a quarter point to 2.25 pct, its first hike in over five years Though the ECB is not expected to raise rates this Thursday, analysts said today's ZEW may well prompt the bank's president Jean-Claude Trichet to sound more hawkish in his ensuing press conference. "The rise in the ZEW index will bode well for the euro, adding further weight to the argument that the ECB will not be neutral in the press conference following the council meeting this week," said Kotecha. ZEW bases its analysis on responses from about 300 investors and analysts