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Euro trims gains in US after brief move higher

NEW YORK: Euro trimmed some gains versus the dollar in wake of ECB, traers said on Thursday. VP Noyer's comments that he hopes the euro's upward potential will materialise rather soon. Euro versus dollar needs to top 97.40 for more gains.Now threatening 107.50 yen where more Japanese exporter offers are thought to be waiting, though dealers suspect some have pulled orders in the hope of selling at better levels. Potential seen to 108.10 yen on this rally, which also rumoured to be MOF's target for fiscal year-end. Euro follows dollar up to 103.16 yen from 102.46 late in New York and now targetting 103.80 resistance. Euro sidelined on dollar at $0.6906 from on Wednesday's low around $0.9575. Japanese trade surplus rises 26.8 pct yr/yr to 1.18 trln yen, slightly above analysts' forecasts. Report has scant effect on the market. The June bond rose 1-2/32 to a 97-20/32 session high in morning dealings. That was a "technical milestone," de Marcilla said, as 97-21/32 was the 38 percent retracement level of the decline from 111-21/32 to 89-00 in nearby bonds.

The June bond may sink after closing off its highs, and if support at 96-16/32 does not hold, the contract will likely sink further, de Marcilla said.

Also pressuring debt futures in the afternoon was heavy supply due to the $5 billion of 10-year notes by Freddie Mac, de Marcilla said.

Traders await the release of US February durable goods, forecast to decline 0.2 percent overall.

At settlement, June T-bonds were up 16/32 at 97-2/32, 10-year notes up 4/32 at 97-11.5/32, five-year notes up 2.5/32 at 98-4/32, two-year notes off 1.5/32 at 99-2.5/32, muni bonds up 19/32 at 94-31/32 and September Eurodollars off 0.035 at 93.135.-Reuters