LONDON, Aug 27: The euro was holding onto some of its early gains on Wednesday, having recovered from a six-month low against the dollar seen after weak German business and consumer confidence data the previous day.

Dealers said fresh US and German indicators on Wednesday were broadly supportive for the dollar which appears to have turned the corner against the euro after years of sustained weakness.

The latest German inflation figures showing a fall to 3.1 per cent in August from 3.3 per cent in July suggested the European Central Bank could soon look at cutting interest rates, they noted.

At the same time, better-than-expected US July durable goods orders up 1.3 per cent combined with Tuesday’s more positive US consumer sentiment data were good news for the dollar.

In late London deals, the European single currency was at $1.4688, well off early highs of $1.4723 but still above $1.4653 in New York late on Tuesday.

The dollar rose to 109.77 yen from 109.67.

Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi in London, noted that Tuesday’s Ifo German business confidence reading had hit the dollar but the losses had been mostly recovered.

The euro had slumped under $1.46 on Tuesday after the release of downbeat consumer confidence and business sentiment surveys in Germany, Europe’s biggest economy.

Dealers said the euro was also weighed down by worries about Russia’s recent military action in Georgia given the extensive trade ties between Europe and Moscow.

The dollar has been supported recently by speculation that major economies other than the United States may feel the effects of a global slowdown more, prompting the central banks in those countries to lower interest rates.

In contrast, minutes from the Federal Reserve’s August 5 meeting released Tuesday showed members indicated their next move was still most likely an interest rate hike in view of inflationary pressures.—AFP