Dollar closed slightly lower after a range bound movspanent against the euro yesterday due to the recovery in European currency after the decision from ECB.

Dollar closed slightly lower after a range bound movspanent against the euro yesterday due to the recovery in European currency after the decision from ECB.

The Euro strengthened against the dollar after the European Central Bank announced the decision to keep its interest rate unchanged in a policy meeting yesterday. The ECB decided against a rate cut giving due consideration to the high inflation which is currently above the target rate.

The Labor Department reported on Wednesday that the productivity of the US non farm business sector rose at a 2.2% annual rate during the first months of the year.

Unexpectedly span data from the US Service sector underpinned the dollar. According to the data released on Monday the ISM's non manufacturing index rose to 52.0% in April from 49.6% in March.

But a report from National Association of Realtors showed that pending home sales in the US fell 1.0% in March an indication of continuing weakness in the housing market.

The unspanployment rate in US had slipped to 5.0 percent from 5.1 percent in March compared with forecasts of a rise to 5.2 percent. The data changed the view of immediate another rate cut and are supported the greenback.

The Fed had cut its overnight lending rate by 25 basis points to 2 percent and signaled that its next move would depend on developments in financial markets and the economy. The Feds signal boosted the optimism of the traders in the currency market. Since mid Septspanber the U.S. central bank has slashed the fed funds rate target by 3.25 percentage points to shore up an economy. Medium Term OutlookExpecting a short term recovery in dollar if it sustains below 1.5725 Supports are 1.5909 1.6148 and 1.6420. Resistances are 1.555 1.5380 1.5220 and 1.5110. In spot dollar closed at 1.5402 (1.5390) against the euro after trading in the range 1.5442 1.5283.Last day DEUR June traded in the range 154.04 152.75 and closed at 153.77.


TECHNICAL OUTLOOK (Intra day)


DEUR (June) Bullish above 153.83 bearish below 153.37


COMMODITY

CL.RATE

SUP .2

SUP.1

RES 1

RES 2

DEUR (June)

153.77

152.20

152.94

154.29

155.00



DATA TO WATCH

2008 May 9


GMT

Currency

Forecast

Previous

8:30am

USD

Trade Balance

61.4B

62.3B

Dubai time = GMT +4 hours