The euro held at an eightweek high against the dollar on Monday despite a disappointing sentiment survey in Germany as expectations the U.S. Federal Reserve will maintain its dovish stance at a policy meeting weighed on the greenback.

German business morale improved by less than expected in April as a third wave of COVID19 infections and problems with supply of components in the industrial sector slowed a recovery in Europes largest economy.

Both the third wave of infections and bottlenecks in intermediate products are impeding Germanys economic recovery, Ifo President Clemens Fuest said in a statement.

The euro gave up some of its earlier gains to stand 0.03 higher at 1.2105 at 0823 GMT, levels not seen since the beginning of March.

On Friday, the common currency posted its biggest daily gains since early February after positive data on European services and manufacturing activity lifted sentiment.

The dollar index was down 0.13 at its lowest level since March 3.

The Feds next meeting ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to comments from Chairman Jerome Powell.

Powell is likely to face questions over whether an improving labour market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, but most analysts expect him to say such talk is premature, which would put downward pressure on Treasury yields and the dollar.

The Fed has managed to convince the market that it is in no…