The euro fell from a one-week high against the dollar and yen as a report showing an unexpected gain in German business confidence wasn’t enough to allay concern that the European economy is deteriorating. “There has been some stabilization in the data, but it is still at weak levels,” said Marcus Hettinger, a currency strategist at Credit Suisse Group AG in Zurich. “It looks like the recovery in risk appetite is losing steam.” The euro may trade in a range of $1.25 to $1.32 in the next three months, Hettinger said. The euro dropped 0.1 percent to $1.3173 at 7:52 a.m. in New York, from $1.3189 yesterday, after touching $1.3330, the highest level since Jan. 19. The euro was at 117.50 yen, compared with 117.51, after reaching 119.45, also the highest since Jan. 19. The yen traded at 89.21 per dollar, compared with 89.10 yesterday. The pound rose as much as 1.8 percent to a one-week high of $1.4242. Barclays Plc said yesterday it retains 17 billion pounds ($23.9 billion) more capital than required by regulators after writing down another 8 billion pounds of bad loans. Sterling plunged to $1.3503 on Jan. 23, the lowest level since September 1985, after the government announced its second bank bailout in three months. The pound has slumped 29 percent versus the dollar since the end of June. German Sentiment The euro earlier gained after the Ifo institute in Munich said its German business climate index, based on a survey of 7,000 executives, rose to 83 in January from 82.7 last month. The median forecast of 37 economists surveyed by Bloomberg News was for a decrease to 81. The International Monetary Fund expects Germany’s economy, Europe’s largest, to contract 2.5 percent this year, fueling expectations the European Central Bank has room for more interest-rate cuts. “We expect the single currency to remain in a broad downtrend, in particular versus the dollar,” analysts led by Zurich-based Mansoor Mohi-Uddin at UBS AG, the second-largest currency trader last year, wrote in a research report yesterday. “We expect price pressures to keep on abating, and this will likely enable the ECB to ease rates further.” UBS recommends selling the euro with a target of $1.25 and an automatic buy order at $1.3450 to limit losses, according to the report.

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