LONDON: The euro inched up against the dollar on Monday after a stronger-than-expected German business survey offered some respite, though it stayed close to a two-year low on bets of more easing in the euro zone.
A monthly business climate index rebounded in November, in a sign Europe's largest economy is gaining momentum after narrowly avoiding a recession in the third quarter.
The euro gained 0.2 percent to trade at $1.24110, having earlier traded as low as $1.2359, within a whisker of a two-year low hit earlier in the month.
On Friday European Central Bank chief Mario Draghi threw the door open for more drastic measures as he stressed that "excessively low" inflation had to be raised fast.
That sent the euro down over 1.2 percent - its biggest daily fall in 2-1/2 months.
Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ in London, said there was scope for the euro to strengthen into the end of the year, particularly as December tends to be a strong month for the shared currency.
"We think that the relative monetary policy play is pretty much priced in, so it is going to become a struggle to push further lower for the euro," he said.
But Ian Stannard, head of European FX strategy at Morgan Stanley in London, said the tone of Draghi's comments had convinced the market that the ECB was committed to increasing its balance sheet by whatever means necessary, which would push the euro lower.
The dollar gained 0.4 percent against the yen to 118.26.
It hit a seven-year high of 118.98 yen last week after Prime Minister Shinzo Abe called a snap election and delayed a planned sales tax hike.
The Swiss franc was weaker against the euro at 1.2025 francs , having eased away from a 26-month high last week.
UBS strategists said data showing the amount of cash commercial banks hold with the Swiss National Bank surged last week confirmed their view that the central bank may have intervened to defend its peg of 1.20 francs per euro last week.
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