Investing.com - The dollar moved higher against the euro on Monday as disappointing German business confidence data dampened demand for the common currency, while the pound remained steady after data showed that U.K. inflation rose at the slowest pace in more than four years in February.
EUR/USD was last trading at 1.3816, down from Monday’s highs of 1.3875.
The euro drifted lower after a report showed that the German Ifo business confidence index dropped to 110.7 in March from 111.3 in February. Analysts had expected the index to tick down to 111.0.
The expectations component of the index weakened as concerns over the impact of the Crimea crisis weighed, but the current assessment component continued to improve, rising to the highest level since April 2012.
Investors were looking ahead to U.S. reports on consumer confidence and new home sales later in the session for further indications on the strength of the recovery.
The dollar ended Monday’s session lower against the euro after lackluster U.S. manufacturing report for March indicated that the economy is still struggling to gain traction in the wake of a weather induced slowdown.
The dollar was steady close to five-week lows against the pound, with GBP/USD trading at 1.6502.
Sterling showed little reaction after official data showed that the annual rate of inflation in the U.K. fell to 1.7% in February, from 1.9% in January.
January was the first time in more than four years that the U.K. inflation rate fell below the Bank of England’s 2% target. The decline in inflation will give the Bank of England leeway to keep rates on hold for longer, even as the economy continues to make a rapid recovery.
Elsewhere, USD/JPY edged up 0.04% to 102.28 and USD/CHF rose 0.23% to 0.8827.
The Australian dollar advanced to three-month highs, with AUD/USD up 0.23% to 0.9150 after weak Chinese manufacturing data on Monday fuelled hopes that the government could implement stimulus measure to shore up growth. NZD/USD edged up 0.09% to 0.8552, while USD/CAD inched up 0.05% to 1.1197.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.17% to 80.20.