With German business sentiment much worse than expected, Ifo report cause euro down to its almost 3 week lowest against dollar. This supports the possible interest rate cuts next week. Lower interest rates may aid German exports and weaken euro, which already dropped 1.5% against dollar since the beginning of the year.
"In the short run, worsening prospects for the German economy could at least increase the silent support for more ECB action," said ING economist Carsten Brzeski.
"A rate cut and more non-standard measures will not kick-start economies but weaken the euro exchange rate. Particularly a weaker euro could be a welcome relief for exporters."
Dollar is at 3-week high against other currencies on Wednesday, staying strong against euro which has been crippled by the increasing anxiety of an interest cut by the European Central Bank.
The breaking news for today also included the headlines of US march durable goods orders falling below 5.7%.
The pair opened Wednesday with 1.3002 and managed to climb over the previous decline caused by pessimistic German IFO survey results.
GBPUSD struggles with the data on net borrowing on UK public sector. After a plunge to 1.5200, the pair recovered and corrected to 1.5260 level. Keep an eye on UK housing market and retail sales index by CBI.
The pair is trading at 98.88 after pessimistic US existing home sales report. Investors purchase dollars following the rebounds of US and Japanese stocks. The recovery is seen after a drastic reaction of the market to weaker Chinese and US economic data and the Boston marathon bomb attack, which caused dollar to dip below 96.