The euro dipped briefly from one-week highs against the dollar and yen on Thursday after Germany's Ifo business sentiment index showed an unexpected decline in the outlook for the eurozone's biggest economy.
The dollar has been on the back foot as weaker-than-expected US durable goods data on Wednesday and surging oil prices have dimmed investor optimism on the US economy.
The euro had built up momentum since Tuesday's news that Germany's ZEW investor confidence indicator hit a 17-month high. But the Ifo business sentiment index unexpectedly fell to 94.6 in August from 95 the previous month and compared to a forecast rise to 95.2.
"The market had its hopes up after the ZEW. I would still say sentiment is still perhaps that the eurozone will recover (and we had) recent good numbers although the Ifo wasn't one of them," said Johan Javeus, currency strategist at SEB in Stockholm.
"The market had been disappointed by eurozone growth so the market wants hard evidence."
The euro fell around a third of US cent after the Ifo, but stood 0.15 percent up on the day at $1.2286 by 1213 GMT.
But the euro's losses were stemmed quickly as the dollar stayed under pressure and it held within half a cent of an earlier high of $1.2323, its highest since August 17.
"The dollar failed to rally on hawkish comments from (Chicago Fed Bank president) Michael Moskow last night," said Monica Fan, global head of foreign exchange strategy at RBC Capital Markets.
Moskow said it was appropriate to continue raising interest rates.
Against the yen the euro was steady at 135.11, having risen in Asia to 135.59, its highest since August 15.
The dollar was down a quarter percent at 109.91 yen.