Markets were reluctant to show much relief in the fact that Ifo's main index only fell to 95.3, instead of the 95.1 consensus forecast, especially as the institute's president said a recovery was still not on solid ground.
Investors were more inclined to shrug off recent weakness in US data ahead of Federal Reserve Chairman Alan Greenspan's speech on Friday, which is expected to be upbeat, but they also awaited Thursday's weekly US jobless claims figures at 1230 GMT.
"Greenspan is likely to just reaffirm that the soft data patch is temporary and other things are looking okay, but I really think that the market is going to need confirmation of that soon," said Paul Mackel, currency strategist at ABN Amro.
"The Ifo figure today, even though people assumed it would be nothing special, at least it argues there is no reason to buy euros on that data release."
By 1121 GMT, the euro traded at $1.2081, flat on the day but still not far from the day's low of $1.2044.
It hit that low - its weakest since August 6 - before Ifo came out. The dollar has staged a three-cent recovery against the euro so far this week.
Against the yen the dollar traded steady at 110.04. The dollar also hit three-week highs against the Swiss franc earlier in the session before giving back some of those gains.
Economists expect US jobless claims to show a slight rise to 335,000 from 331,000 the prior week.
"I imagine there will probably be some decent volatility with the jobless claims number because anything that serves as a reminder of the US payrolls figure next Friday will be useful," said Mackel.