FX OUTLOOK-Tight ranges to prevail for euro/dollar

By Lucia Mutikani

NEW YORK, July 18 (Reuters) - The dollar could stay trapped in a tight range versus the euro next week amid a dearth of major U.S. economic data, but German inflation and business sentiment reports could lend a weaker bias, while U.S. bank earnings remain a wild card.

Analysts said shaky equity markets and persistent worries over the health of the U.S. financial sector might see the greenback trend weaker against the Japanese yen after recent sharp gains spurred by a steep decline in crude oil prices.

Those concerns could again take center stage when Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) releases second-quarter earnings on Monday. This week Wells Fargo, JPMorgan Chase & Co and Citigroup surprised investors with results that were less weak than feared.

Analysts expect Bank of America to show a more than 60 percent decline in profits when it reports its results on Monday. Anything stronger, however, may be perceived by some as a sign the banking system remains healthy despite the credit crisis.

"We don't really see too many catalysts for breaking out of the current ranges. What we saw this week was the upside range for euro/dollar bent but not broken. There was a historic high, but barely above the previous high," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

"There is really little on the (economic) calendar to suggest that we're going to cover new ground. I would expect range trading, broadly speaking between 1.57 and 1.59 for euro/dollar next week."

The euro climbed to a record peak of $1.6038 on Tuesday, according to Reuters data, and was last quoted around $1.5846.

In the absence of key U.S. data, market attention will focus on Germany's preliminary consumer inflation data for July and the Ifo business sentiment report for clues as to whether the European Central Bank will raise interest rates again.