The 'We Are Never Ever Getting Back Together' singer is debating getting back together with the One Direction star, according to The Sun.
"Taylor realised she was being a bit full-on," a source said. "She is now more relaxed about their relationship.
"She intends to enjoy it more rather than worry about where it could eventually lead. Harry is not the sort of guy you can stay mad at for long.
"She's given him some space and it's done them both a world of good."
Harry Styles and Taylor Swift on holiday
The insider also claimed that arguments between Styles and Swift over New Year's are "now a distant memory".
The couple's alleged reunion comes after Swift flew to London for a 'showdown' with Styles due to her reportedly feeling embarrassed about her failed relationships.
Harry Styles with One Direction
One Direction's manager Simon Cowell recently dismissed suggestions that he was behind their crisis talks.
It had been claimed that Styles initially dumped Swift because she "didn't want to put out".
View all of today's best celebrity pictures - Photo gallery: