LONDON (AFX) - The dollar remained weak in early trade following US Federal Reserve chairman Alan Greenspan's cautious message on the economic outlook and the larger-than-expected US trade deficit, dealers said. "There's now a view that the strength of the recovery in the US may not be as great as first thought," Halifax chief currency strategist said. "The dollar will need some pretty reassuring numbers to arrest its slide," he said. WestLB's Michael Klawitter agreed: "The dollar will remain vulnerable to any disappointment on the data front.... The risks of a softer dollar over the course of this year are increasing, be it for economic uncertainties in the US or rising US interest rates." The focus will be on the release of US weekly jobless claims, leading indicators and the Philadelphia Fed's April business survey. Economists are expecting initial claims for regular state unemployment benefits to have fallen by 28,000 to a seasonally adjusted 410,000 for the week ended April 13 after claims fell 55,000 to 438,000 in the prior week. The Conference Board's Composite Index of Leading Indicators is expected to show a rise of 0.3 pct after it rose 0.6 pct in February. Forecasts indicate that the Philadelphia Fed business activity index rose to 14.1 in April from 11.4 in March. That would mark the fourth straight monthly increase after 13 negative readings. Despite the dollar's weakness, the euro is not likely to remain firm for long. "The ongoing price pressure in the euro zone where core inflation has risen from 1.7 pct in August 2001 to 2.5 pct stands in contrast to the very stable situation in the US," Klawitter said. "Headline inflation rates are diverging even more which undermines the relative competitiveness of the EU and therefore will be euro negative if it lasts," he said. In the UK, sterling responded well to yesterday's budget which increased taxes to pay for extra health spending. The optimistic growth forecasts in the budget coupled with the fact that the taxes do not come into effect until next year mean that the Bank of England's monetary policy committee is expected to come under pressure to put up interests before long, according to some economists. "Basically, as it becomes increasingly clear that the consumer sector is not slowing of its own accord, the MPC will move to take rates back to a neutral level," Deutsche Bank economist Ciaran Barr said.