By William L. Watts & Lisa Twaronite, MarketWatch
LONDON (MarketWatch) -- The dollar gained ground versus the euro Thursday, buoyed by a weaker tone in equity markets but trapped in a tight trading range.
The euro slipped to $1.4846, down from $1.4956 in late North American trading on Wednesday.
The currency pair remains trapped in a stalemate between support at $1.4800 and resistance at $1.5050, wrote strategists at UniCredit MIB in a research note, with "only bullish U.S. data and equity possible triggers for a break-out to the upside."
Euro bulls, however, remain sensitive to recent efforts by the European Central Bank to talk the single currency down, they said. Meanwhile, overall foreign-exchange trading conditions remain "very soggy," they said, with range-trading likely to prevail amid a light economic calendar.
The dollar and the Japanese yen were both boosted versus major rivals as Japanese equities lost ground in Asian trade. A weak tone in Europe and in U.S. stock index futures, as well as losses by oil and gold reinforced support for the low-yielding currencies, strategists said.
The dollar and the yen have tended to hold an inverse relationship to moves by equities and commodities in the wake of the global financial crisis.
The dollar index (DXY 75.46, +0.27, +0.36%) , a measure of the U.S. currency against a trade-weighted basket of rivals, fell 0.4% to 75.482.
The dollar slipped to 88.84 yen, down from 89.45 yen late Wednesday. The euro fell 1.3% against the Japanese unit to fetch 131.99 yen.
The British pound ignored a raft of data, including a rise in October retail sales data. The pound slipped to $1.6631 against the dollar, down from $1.6736. Read about October U.K. retail sales and other data.
The Bank of Japan will conclude its two-day policy meeting Friday, and is widely expected to leave its overnight call rate target at 0.1%.
Some analysts also say the yen is poised to benefit from China's eventual revaluation of the yuan, which is now kept artificially low against the dollar.
"We continue to believe that yen could strengthen further aided by both risk aversion flows and the nagging issue of yuan revaluation," said Boris Schlossberg, director of currency research at GFT.
"Unless the dollar strengthens materially, providing some relief for export-led Asian economies and the Europeans we think the yuan revalue story will persist and the Chinese will have to respond to world pressure even if the move may be largely ceremonial rather than economic," he wrote in emailed comments.
On Wednesday, the dollar headed lower versus the euro and other major counterparts, falling for the third session in four, as a surprisingly weak report on U.S. housing starts and comments from a Federal Reserve policy maker solidified expectations that interest rates would remain low for some time. See Wednesday's Currencies report.
