The European single currency surged to a seven-week high against a slumping U.S. dollar Tuesday investors reacted to last night's debate among candidates in France's contentious Presidential elections and re-set expectations for rate hikes from the Federal Reserve.

The euro was marked 0.6% higher against the greenback in early London trading, rising past the 1.08 mark for the first time since Feb. 2 after an unconvincing performance from far-right, anti-European candidate Marine Le Pen in a nationally televised debate four weeks ahead of first round voting in France's two-stage electoral process.

Le Pen, who chose not to make reference to a previous pledge to hold a referendum on single currency membership, was soundly beaten in the five-way contest by centrist rival Emmanuel Macron that lasted more than 3.5 hours. 

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The tone of the debate, the apparent success of Macron and the results of last week's national elections in the Netherlands have combined to add renewed optimism in the single currency, which had been battered by concerns of a populist surge in the region's election cycle.

The euro was given a further boost by a slumping dollar, which fell to 99.73 -- the lowest since Feb. 1 -- against a basket of global currencies after two Federal Reserve officials downplayed speculation of faster rate hikes in the world's biggest economy.

Chicago Fed President Charles Evans told Fox Business that he could support "three total (hikes) this year" if inflation began to pick up. "It could be three, it could be two, it could be four if things really pick up," he said. Those comments were tempered by Minneapolis Fed President Neel Kashkari, who told Bloomberg he wasn't worried about falling short of market expectations.

Investors have also reacted to yesterday's dramatic testimony from FBI Director James Comey, who told Congressional lawmakers in Washington Monday that he was investigating alleged links between Russia and President Donald Trump's election campaign.

That revelation, as well as the ongoing debate among Republican lawmakers over the Administration's new healthcare plans, has raised concerns the the President's ambitions plans for fiscal stimulus and tax reform could be pushed further into the future.