(Updates with late New York prices)
* Dollar gains ground against euro
* U.S. housing and durable goods reports encourage dollar
* Draghi reinforces expectations of ECB easing next week
By Daniel Bases
NEW YORK, May 27 The euro softened slightly
against the dollar and the yen on Tuesday after unexpectedly
strong U.S. economic data and uncertainty persisted over
possible European Central Bank monetary policy action next
The euro steadily lost ground on the greenback as investors
in the United States and Britain returned from long holiday
weekends and encountered stronger-than-expected U.S. durable
goods data that was tempered by revisions to past reports.
Housing price data in the U.S. rose, but underlying strength
was viewed as mixed as prices are rising more slowly on a
year-over-year basis, according to the S&P/Case-Shiller Home
Prices Indices report.
ECB President Mario Draghi, speaking in Portugal, said the
bank was aware of risks from prices remaining too low for too
long but that the bank had the tools to get inflation back to
its 2 percent target.
"We have a pretty good idea that some sort of action in June
is likely, if those inflation forecasts are revised lower, which
it looks likely they will be. But they haven't given us the
indication of what type of action they will take," said Brian
Daingerfield, currency strategist at the Royal Bank of Scotland
in Stamford, Connecticut.
The euro zone issues its May flash inflation data on June 3
with the Reuters consensus estimate of economists forecasting a
0.7 percent year-on-year increase. The ECB's
governing council meets on June 5.
In late afternoon New York trade, the euro fell 0.08 percent
to $1.3634 after briefly touching a fresh three-month low
of $1.3613. Analysts at BNP Paribas see the euro now trading
cheap following its sell-off, putting a fair value level at
Against the yen, the euro softened 0.02 percent to 139.05
The dollar index gyrated in and out of positive territory.
It was down 0.05 percent against a basket of currencies in late
"It looks like the dollar is better bid for choice as there
really is not a lot going on other than commercial interests. It
is also getting on to the end of the month and American
corporates are doing some buying," said Lane Newman, director of
foreign exchange for ING Capital Markets in New York.
"For the ECB, I think anything less than a 10 basis point
cut will be seen as a disappointment. Generally speaking I do
not favor the euro," Newman said.
(Editing by James Dalgleish)