The euro advanced against its major counterparts in the European session on Wednesday, as European stock markets rose after Ukrainian President Volodymyr Zelenskyy said that he has dropped his plan to join NATO, raising hopes for a diplomatic solution to the ongoing war in the country.

NATO is not prepared to accept Ukraine as it wants to avoid a confrontation with Russia, Zelenskyy said on Tuesday.

Zelenskyy added that he is willing to compromise on the status of two breakaway pro-Russian territories recognized by Putin as independent.

Separately, NATO secretary-general Jens Stoltenberg said there were credible reports Russian forces were targeting civilians in Ukraine and urged the Kremlin to ensure the war would not spread beyond.

Investors awaited the monetary policy decision from the European Central Bank due Thursday. The Governing Council is widely expected to retain the policy amid the ongoing war in Ukraine.

The euro appreciated to 5-day highs of 1.0993 against the greenback and 127.36 against the yen, up from its prior lows of 1.0890 and 125.96, respectively. The euro is seen finding resistance around 1.12 against the greenback and 129.00 against the yen.

The euro rebounded from its early lows of 0.8315 against the pound and 1.0112 against the franc, hitting a 1-week high of 0.8349 and a 6-day high of 1.0199, respectively. The euro is likely to challenge resistance around 0.86 against the pound and 1.04 against the franc.

The euro recovered modestly against the loonie, with the pair trading at 1.4088. On the upside, 1.43 is likely seen as its next resistance level.

In contrast, the euro was down against the aussie and the kiwi, touching 1.4936 and 1.5993, respectively. If the currency falls further, 1.45 and 1.54 are likely seen as its next support levels against the aussie and the kiwi, respectively.

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