Investing.com - The euro extended gains against the dollar on Monday, advancing to two-week highs following upbeat German data, as investors turned their attention to the upcoming Federal Reserve policy meeting.
EUR/USD hit highs of 1.1111, the most since July 13 and was last at 1.1088, gaining 0.96% for the day.
The dollar slumped as investors awaited Wednesday’s Fed statement to see if policymakers will give any indication on the timing of an initial rate hike.
Fed Chair Janet Yellen has said the central bank could raise rates as soon as September if the economy continues to improve as expected.
The single currency received an additional boost after a report showed that German business confidence improved this month, boosting the outlook for the euro area’s largest economy.
The Ifo research institute said its business climate index rose to 108.0 from a reading of 107.5 in June, compared to expectations of 107.2.
Meanwhile, formal talks between Greece and its international creditors on a new bailout package were expected to get underway later Monday.
Talks had been expected to start on Friday but were delayed by logistical issues, including security matters.
A new agreement must be reached before August 20 when Greece must repay more than €3 billion to the European Central Bank.
The dollar was also lower against the yen, as safe haven demand for the Japanese currency was boosted after a steep selloff in Chinese equities hit global risk sentiment.
USD/JPY was down 0.34% to two-week lows of 123.38. The yen was lower against the euro, with EUR/JPY rising to 136.78 from 136.06 earlier.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.68% to 96.68, weighed down by the stronger euro.