LONDON (AFX) - The euro is under further pressure in early trade as attention shifts to the German index of business sentiment for September, due for release at 9.00 am, dealers said. The euro has struggled all week, unable to capitalise on the multitude of difficulties afflicting the dollar, from poor economic news to the anthrax alert, which forced the closure of Capitol Hill on Wednesday. Neil MacKinnon, senior currency strategist at Merrill Lynch said "all eyes are on the Ifo index" but doubts that the data will alter sentiment towards the euro too much. The euro could drop to 88.5 cents against the dollar, MacKinnon said, as long positions are being unwound. "It's been on the backfoot all week, not helped by the ECB's apparent inflexibility on rates," he said. However, he thinks the euro will have a better base for recovery once the long positions, set up after Sept 11, are unwound. The Ifo survey is expected to give a reading of around 88, down from 89.8 in August. Anything substantially lower may present another euro-selling opportunity, dealers said. Evidence of the parlous state of the German economy was provided yesterday by finance minister Hans Eichel, who cut his 2001 growth forecast for Europe's largest economy to 0.75 pct. The European Central Bank also provided bears a reason for selling. In its monthly bulletin, the central bank confirmed that confidence in the euro zone has been hit hard by the terrorist attacks in the US. However, dealers were disappointed the ECB appears reluctant to ease rates. Bear Stearns currency economist Steve Barrow agrees with MacKinnon that the euro could fall to 0.88 usd by the end of the year. "A quicker-than-expected resolution to the conflict in Afghanistan... and possible euro sales at year-end should put 0.88 usd in the frame," he said.