The euro managed to brush off a very weak survey into German business confidence as it failed to alter market expectations that the European Central Bank will keep borrowing costs on hold for a while yet amid continuing inflationary concerns. The ZEW research institute's expectations index fell to a 15-year low of -32.5 in November from -18.1 in October, largely because of the strong euro, sky-high oil prices and worries over the US economy. The fall was much greater than anticipated. Markets were looking for a more limited decline to -20.0. Analysts said the survey's pessimism may be overdone but noted that it does point to weaker economic growth in the fourth quarter in the euro zone's single largest economy. "This places the ECB in a tricky position, with the Bank walking a tightrope between higher inflation on the back of food and energy prices and increased growth risks as a result of the fallout from the US subprime market," said Stuart Bennett, senior FX strategist at Calyon. "For the time being, these two pressures appear to be cancelling each other out and continue to point to steady rates for the foreseeable future," he added. The euro has been driven higher against the dollar over the last few months because investors expect the interest rate differential between the US and the euro zone to narrow rapidly over the months to come. While the ECB keeps, and is expected to keep, its key refi rate on hold at 4.00 pct, the US Federal Reserve is cutting its borrowing costs and may well reduce them again in December in response to concerns that the US housing sector will drag down the banking system. The Fed has reduced its key interest rates by 75 basis points in the last two months, plunging the dollar to record lows against major currencies. The dollar fell to an all-time low of 1.4738 against the euro on November 9.