But the shared currency is unlikely to make large gains due to concerns the euro zone economy overall is still struggling. 

That keeps alive the risk that the European Central Bank could cut its deposit rate, at which lenders park surplus funds at the central bank, to a negative rate from zero, making it unattractive to hold euros and hence keeping the currency under pressure, traders said.

  German ZEW's monthly poll of economic sentiment is forecast to rise to 38.3 in May from 36.3 while currency conditions are also expected to show some improvement. 

A better-than-expected number could lift the euro to $1.3050 with stop-loss buy orders cited at $1.3055 while a disappointing number could push it down towards $1.2950, traders said.

  The euro was up 0.2 percent at $1.3000, with traders citing buying by Middle East investors, helping it stay well above its recent five-week low of $1.2935. It gains pushed the dollar index .DXY away from a five-week high of 83.438 struck on Friday to trade at 83.109 on Tuesday.