LONDON (AFX) - The euro weakened against the dollar in muted midday trade ahead of a string of U.S. economic data, due at 1.30 pm, which could give fresh impetus to currency markets, dealers said. Russel Bloom, analyst at Standard & Poor's MMS said trading activity was very thin following the euro's inital downward move yesterday on the European Central Bank's decision to leave rates unchanged. "ECB officials seem to want to wait until they are in trouble before they can act," Bloom said, adding that the euro's downside "may come back into play, with 0.8720 usd probably the near-term focus." Dealers said that there had been some dollar short covering ahead of the extended Easter weekend. "The follow-through buying is not very pronounced ahead of the four-day break," he said. "The dollar/yen buying was the main mover before the beginning of our session." He noted that a wave of options expire at 125 yen leading option holders to unwind their long dollar/yen positions, had resulted in the dollar experiencing a sharp downward move to 123 yen from the 124.95 yen overnight high. Market watchers will be keeping a close eye on the U.S. Michigan consumer confidence survey, retail sales and producer prices for March, due at 1.30 pm, for direction. However, Bloom believes the data will only have limited impact as the market has already priced in another U.S Federal Reserve rate move by 50 basis points. Most players believe that the risk of an inter-meeting cut by the Fed is off the agenda in the wake of recent stock market recovery. Meanwhile sterling was little changed against the majors, dealers said. Jasper Dannesboe, chief strategist at Dresdner Kleinwort Wasserstein, said: "The biggest move was against the yen, which was to do with dollar/yen which pushed sterling/yen lower."