Investing.com - The euro edged higher against the dollar on Monday but gains were held in check by prospects for more central bank easing and after data showing that German business conditions deteriorated this month.
EUR/USD was last up 0.12% to 1.1030 after touching highs of 1.1057 earlier. The single currency fell to lows of 1.0995 on Friday, the weakest since August 11.
The euro weakened late last week after European Central Bank President Mario Draghi signaled that further monetary easing is likely later this year.
The comments underlined the diverging monetary policy stance between the Federal Reserve and other central banks. The Fed is currently expected to start hiking interest rates sometime in early 2016.
On Friday, the People’s Bank of China unexpectedly cut interest rates in an effort to shore up slowing growth in the world’s second largest economy.
It was the sixth rate cut since last November, reinforcing the divergence in monetary policy between the U.S. and central banks in the rest of the world.
Investors were looking ahead to Wednesday’s monetary policy announcement by the Fed for fresh indications on the timing of an initial rate hike.
The single currency backed off the day’s highs after data showing that the business climate in Germany worsened this month, for the first time in four months.
The Ifo’s business climate index fell to 108.2 from 108.5 in September, but was better than expectations for a reading of 107.8.
The current conditions index fell to 112.6, from 114 a month ago, but the expectations index rose to 103.8, from 103.3.
The euro was lower against the yen, with EUR/JPY slipping 0.2% to 133.57 and was almost unchanged against sterling, with EUR/GBP at 0.7196.