That accelerated a fall in the euro, giving the region's exporters a competitive edge abroad. The single currency has fallen almost 21 percent against the dollar in the past year.
On Wednesday, however, the euro climbed towards $1.10 as the strong Ifo business sentiment survey boosted expectations for an economic recovery in the euro area.
"The German IFO business climate data was as healthy as it could be, and have printed another strong reading this morning. This has pushed the euro up which was already trading higher this morning," Naeem Aslam, chief market analyst at AvaTrade, said in a note.
Jessica Hinds, European Economist at Capital Economics, said Greece remained the key risk to German business sentiment going forward.
Germany and Greece have been at odds over efforts made in Athens to renegotiate the terms of its international bailout. And concern is growing that Greece could be facing another near-term cash crisis soon.
Read MoreGreece risks running out of cash by April 20
"While German firms have dismissed concerns about Greece, there is a clear risk that the crisis intensifies and starts to weigh on business activity in Germany," Hinds said in a note.
"Accordingly, we expect slightly more modest GDP growth than the Ifo suggests of around 1.5 percent this year and next. But this would not be enough to eradicate deflation risks elsewhere in the euro-zone," she added.
- This story was updated to correct quote in paragraph six, which should read tailwinds not headwinds.
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