LONDON (AFX-ASIA) - The dollar continued to look soft against major currencies in early trade as sentiment nose dived after yesterday's ballooning US trade deficit and ensuing falls on Wall Street, dealers said. A worsening economic situation in Brazil and escalating Israel-Palestine tensions are also hurting the dollar. But if there is Japanese intervention to weaken the yen, there may be a small lift for the dollar all around, they said. There is little on the data front and activity in London remains subdued with all eyes glued to TV sets as England takes on Brazil in the quarterfinals of the World Cup. The record US trade deficit weighed heavily on the dollar as it comes at a time when foreign appetite for US assets has clearly been slowing, Michael Klawitter, currency strategist at West LB said. "In Q1 2002, foreigners were only buying 93.3 bln usd in US assets compared with 166 bln usd in Q4 and 156 bln usd in Q1," he noted. The dollar also carries the burden of Brazil's problems given that a further deterioration there would have much wider implications than Argentina's default, Klawitter said. "Without any US data to be released, dollar sentiment is likely to remain weak and hopes for some near term stabilisation must be pinned down to Japanese intervention," he said. The yen maintained its strengthening bias, assisted very much by the depreciating US dollar. "As we move to levels where prior intervention has occurred, don't be surprised to see the Japanese authorities intervening in the market again," Richard Grace at West LB said. Japanese Finance Minister Masajuro Shiokawa's comments that Japan may need to act if the yen swings drastically must be kept in mind. If dollar-yen moves lower gradually there may be less resistance from the Japanese authorities, he added. Elsewhere, sterling continued to hover above 1.50 usd amid the general dollar weakness.