* Dollar falls vs yen after durable goods report
* Euro trades in narrow range, strong momentum wanes
* Aussie slides as soft CPI dents rate expectations
(Updates prices, adds details, changes byline)
By Nick Olivari
NEW YORK, July 28 (Reuters) - The U.S. dollar was little
changed versus the euro as investors awaited news that could
push the single currency out of a recent range after it topped
$1.30 for the fifth time this month on Wednesday.
The dollar fell against the Japanese yen as a
weaker-than-expected reading on new orders for U.S. durable
goods added to fears about the U.S. economic outlook.
The Federal Reserve is due to release its report on
regional economic conditions, known as the Beige Book, later in
the session. Analysts said the Fed is likely to report softer
economic conditions, which may add to investors' risk aversion
and hurt the single currency.
Markets seemed comfortable with euro/dollar around $1.3000,
but investors were still wary of opening up new long euro
positions that would take it much higher, said BNY Mellon's
Michael Woolfolk.
"We came a long way this year, from $1.40 to below $1.20 in
the euro, and a lot of that was based on the fear factor. So
the retracement has been merely people taking out a lot of
those short positions," he added.
Woolfolk said it will take a change in risk sentiment to
start a new trend in the pair.
In mid afternoon trading in New York, the euro <EUR=>
traded at $1.2998, with the session peak at $1.3041 and the
session low at $1.2968.
The dollar was 0.3 percent lower at 87.65 yen <JPY=>. It
touched a session low at 87.44 yen as a report showed new
orders for long-lasting U.S. manufactured goods unexpectedly
fell for a second straight month in June, posting their biggest
decline since August. []
A string of lackluster economic reports recently has
weighed on the greenback. On Friday, the government's first
reading on U.S. second quarter GDP is likely to show growth in
slowed in the period amid a cooling in consumer spending and a
wider trade deficit.
"The U.S. data now is the main focus in the forex markets,
and it continues to come on the disappointing side," said
Amelia Bourdeau, a currency strategist at UBS AG in Stamford,
Connecticut.
Investors are lacking "conviction" and trading in major
currency pairs will be limited to narrow ranges, she said.
"We are past the good news from Europe on the stress tests
and earnings, which helped the euro, and I'm not sure if even
the U.S. GDP report on Friday will be able to break that
pattern," Bourdeau said.
Still, this will mark four straight quarters of growth as
the economy digs out of its longest and deepest recession since
the 1930s.
The economy continues to run "below its long-run growth
potential," said Axel Merk, president and chief investment
officer at Merk Investments in Palo Alto, California. "It may
be hazardous to investors' wealth to think this path won't be
hazardous to the U.S. dollar."
The euro touched an 11-week high against the dollar at
$1.3045 on Tuesday, helped by strong bank earnings and gains in
European equities, following last week's favorable results of
regulatory stress tests. []
Traders said an option barrier at $1.3050 would need to be
taken out for a move toward Fibonacci resistance at $1.3125,
which is a 38.2 percent retracement of the December-June move.
One-month euro/dollar risk reversal <EUR1MRR=GFI> was last
at -1.60, well off extreme levels in early June, though still
showing a bias to euro puts and dollar calls. A put gives the
option holder the right to sell at a set price while call gives
the holder the right to buy.
Elsewhere, the Australian dollar <AUD=> slid 0.9 percent to
$0.8936, after touching an 11-week high on Tuesday, on
expectations the Reserve Bank of Australia will leave the
benchmark rate unchanged at 4.5 percent when it meets next
week.
Australian consumer prices rose much less than expected
last quarter, and core inflation slowed to its lowest in more
than three years. []
(Reporting by Nick Olivari and Vivianne Rodrigues, additional
reporting by Steven C. Johnson in New York and Neal Armstrong
in London; Editing by Andrew Hay)
