Investing.com - The euro touched session highs against the dollar on Wednesday after data showing German business confidence improved this month boosted the outlook for the euro area’s largest economy.
EUR/USD was up 0.26% to 1.0952 from around 1.0929 earlier.
The Ifo Institute said its business climate index rose to 107.9 this month, up from 106.8 in February. Economists expected a reading of 107.3.
The survey showed German firms were more upbeat about the current situation than they were last month, with the current conditions index rising to 111.3 from 112 in February, and were also more optimistic about their prospects for the next six months.
"Strong growth in the fourth quarter of 2014, combined with low energy prices and the weak euro exchange rate have boosted confidence in the economy," said Ifo economist Carsten Brzeski.
The weaker euro and lower oil prices are giving German firms a lift the report said and the decline in the euro exchange rate also gave exporters more confidence about future prospects.
The euro’s gains were held in check after stronger U.S. economic reports, including an uptick in inflation, boosted the outlook for higher interest rates.
Official figures on Tuesday showed that U.S. consumer prices rose 0.2% in February, rebounding after a 0.7% decline in January, while core inflation also ticked higher.
The uptick in underlying inflation indicated that the Federal Reserve would still have leeway to tighten monetary policy even with inflation running below target.
The dollar has come under pressure since the Fed indicated last week that it may raise interest rates more gradually than markets had expected.
Elsewhere, the euro gained ground against the yen, with EUR/JPY up 0.16% to 131.03 and was steady against the pound, with EUR/GBP at 0.7359.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.23% to 97.21, not far from Tuesday’s one-week low of 96.58.