LONDON (AFX) - The euro moved higher in early trade, benefiting from a higher-than-expected German Ifo business climate index, dealers said. The strong reading in the Ifo marks the third rise in as many months, indicating a turnaround in activity. The headline index rose to 88.7 in February from a downwardly revised 86.2 last month. "In the past, three increases in a row indicated a turnaround in economic activity," said HSBC economist Lothar Hessler. But the net effect of the data was somewhat watered down by the ZEW survey which had foreshadowed today's outcome, dealers said. There was further cheer in the business expectations component of the Ifo. It rose to 101.0 from 94.8 in January, and 98.5 in February 2001. However, Ifo President Hans-Werner Sinn kept market enthusiasm in check by saying that while business expectations for the coming months have improved, current sentiment has deteriorated further. "The current situation is still considered to be much worse than before September 11, 2001," he said. Despite the euro's slight rise after the news, Steve Pearson, currency strategist at Halifax said overall evidence still shows that the euro zone still lags the US. "It is still a tight range for euro-dollar," he added. The dollar may well be in line for a boost when the US February consumer confidence figures are released at 3.00 pm today, he said. Also to come is US Fed chairman Alan Greenspan's performance at Wednesday's semi-annual monetary policy testimony. "It is now down to a classic Greenspan juggling act between accentuating the positive side of the recovery story while not forgetting the virtuous side of the benign US inflation picture," economists at Bear Stearns said. "The US economy may be over the worst and economic activity is picking up, but we are a long way off the Fed thinking about moving to tightening again," they added. Sterling also ticked higher against the dollar, riding on the euro's gains. Elsewhere, the yen remained in a narrow range against the dollar, with market focus firmly fixed on the Japanese Council on Economic and Fiscal Policy's anti-deflation package due to be announced tomorrow. "But there is likely to be disappointment," Pearson said. One concern is whether the Japanese government will boost the banking system through public fund injections, dealers said.