The dollar traded near a one-week low against the euro as investors bet the Federal Reserve will keep interest rates unchanged next week and the European Central Bank will increase borrowing costs next month. The U.S. currency was also near its lowest in a week against the yen after reports in the U.S. yesterday showed housing starts fell in May to a 17-year low and industrial production unexpectedly declined. 'Traders will look for opportunities to sell the dollar,' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. 'The Fed can't move interest rates. It's caught between inflation and an economic slowdown.'

The dollar is currently trading$1.5537 per euro as of 7:28 am, GMT, when it fell to a one-week low of $1.5552. The U.S. currency was little changed at 108.07 yen, near a one-week low of 107.54 yen and down from a four- month high of 108.58 set June 16. The yen was at 167.33 per euro. It touched 167.84 yesterday, the weakest since July.

The euro may rise to $1.5810 against the dollar in one or two weeks, based on charts traders use to predict price movements, according to Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd. The currency has risen above its five-day moving average, signaling further gains, said Tokyo-based Hashimoto. The euro may now climb toward the next level of so-called resistance around $1.5810, where a descending trend-line, connecting a record high of $1.6019 set on April 22 and a high of $1.5843 on June 9, extends to.

The Sterling is currently trading at $1.9548 from a high of $1.9580. It was little changed at 79.36 pence per euro. The BOE will release today minutes from a June 5 meeting at which it kept borrowing costs on hold at 5 percent. The pound fell yesterday after central bank Governor Mervyn King predicted inflation will exceed 4 percent this year and said the path to bringing inflation within the central bank's target was 'uncertain' in which he wrote a letter to the Chancellor explaining.

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