The Euro experienced a slight increase against the Dollar on Wednesday, while the Yuan reached its highest level in more than a year, boosted by China's bold stimulus package that bolstered investor confidence.

The Dollar, typically seen as a safe-haven currency, faced downward pressure following China's strong stimulus measures announced on Tuesday, which intensified expectations of a significant rate cut in the US this November, creating additional challenges for the Dollar.

Despite disappointing economic data from Germany and worries about the French budget, the Euro has performed “extremely well” against the Dollar this week, according to senior forex strategist at Rabobank, Jane Foley.

She attributed the Euro's strength in part to the belief that improved Chinese demand could positively impact Germany and, by extension, the wider European economy.

The single currency increased by 0.06% to $1.1187, approaching its 13-month high of $1.1201 reached in August, Reuters reports.

Furthermore, as part of its overall easing strategy, the People's Bank of China lowered the cost of its medium-term loans to banks from 2.30% to 2.00% on Wednesday. 

The onshore Yuan climbed to a 16-month high of 7.0012 per Dollar, while the offshore Yuan briefly surpassed the significant psychological threshold of 7 per Dollar, reaching a peak of 6.9952 per Dollar.

“The momentum forward for the Yuan should take cues from China's equity markets as a proxy for sentiment,” stated Christopher Wong, a currency strategist at OCBC.

In addition, Sterling fell 0.2% to $1.33835 after previously rising to $1.343, its highest level since March 2022. 

This earlier increase was supported by expectations of less aggressive rate cuts from the Bank of England this year compared to those anticipated from the Federal Reserve.

According to the CME FedWatch tool, markets are now estimating a 59.1% likelihood of a 50-basis-point rate cut at the Fed's upcoming policy meeting, a significant increase from just 37% a week ago.