The Wall Street Journal-20080204-Forex View- Dollar Likely to Steady As Euro Makes Charge

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Forex View: Dollar Likely to Steady As Euro Makes Charge

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The dollar likely will maintain its ground this week after fighting off another historical low and clawing its way back against the euro on Friday.

While the first drop in U.S. payrolls in more than four years at the end of the week and a midweek cut in interest rates hurt, it wasn't enough to shove the U.S. currency back to its lifetime low against the euro, shared by 15 nations, struck in November.

"I'm impressed at how resilient the dollar has been. Think how much weak data there was," said Marc Chandler, global head of foreign exchange at Brown Brothers Harriman in New York.

There is a growing wariness toward the euro, which faces a psychological and technical barrier at its Nov. 23 high of $1.4968 and then at $1.50.

The consistently disappointing news on the U.S. economy, and its banks and insurance firms, also prods investors to ask, "Can the euro really be immune?" Mr. Chandler said.

Currency analysts say it is possible that the common currency will make a run for its record high this week, but it would be a short- lived sweep.The consensus is for largely range-bound trading this week, between $1.4775 and Friday's high of $1.4956.

Late Friday in New York, the euro was at $1.4799 from $1.4866 Thursday, while the dollar was at 106.59 yen from 106.32. The euro was at 157.70 yen from 158.46 yen Thursday. The pound was at $1.9663 from $1.9886, while the dollar was at 1.0890 Swiss francs from 1.0806.

The disappointing U.S. payrolls report reinforced the market's support for the Federal Reserve's interest-rate cuts, said David Woo, global head of foreign-exchange strategy at Barclays Capital in London.