The US dollar has gained some respite after ECB President Trichet signalled a neutral outlook for Eurozone interest rates. This followed a widely expected 25bp rate hike by the ECB last week. But the dollar isn't out of the woods just yet. The risks are that the ECB, Norges and Riksbank raise rates again this year, and are joined by the SNB. In contrast the Fed is unlikely to tighten monetary policy given America's weakening housing and labour markets. EURUSD is likely to test the top of its 1.53-1.60 range again. Similarly, USDJPY remains a sell on rallies. From a longer-term perspective, however, we remain long a three-month EUR put with a strike price of 1.51 as we expect a broader dollar recovery once the US economy bottoms and the slowing Eurozone turns the ECB from being hawkish to dovish on interest rates.more