The dollar continued to hold onto its gains from recent sessions in a quiet holiday-filled Good Friday session, with the major pairs locked in range. The greenback trades just under the 100-level against the yen and holds steady versus the euro near 1.5450. The actions taken by the Fed this week have, for the time being, stabilized financial markets and tempered the hasty deterioration in the value of the dollar from recent weeks. Additionally, commodity prices have eased off record levels - spot gold having retreated back beneath the $1000 per ounce level to trade around $920/ounce and crude oil back near $100 per barrel.

The Fed's decision to cut by 75-basis points to 2.25% earlier in the week combined with earnings reports from Goldman Sachs and Lehman Brothers tempered the fall-out from the Bear Stearns bailout. Although markets had been eyeing a 100-basis point reduction, the FOMC leaves the door open for another rate cut at the April 29-30th meeting. We anticipate a 50-basis point rate cut at the next meeting bringing the Fed's benchmark lending rate to 1.75%.

The US economic calendar for the coming week consist of February new home sales, durable goods orders, the final reading for Q4 GDP, consumption, personal income, PCE index, and the March University of Michigan sentiment survey. The final reading for Q4 GDP is seen unrevised at 0.6% q/q.

We look for the dollar's rebound to continue against the majors, but view it as a short-term corrective move. Our near-term targets are 1.52 against the euro, 1.96 versus the sterling and 101.50 versus the yen.