LONDON (AFX) - Major currencies were rangebound in dull early trade, struggling for direction ahead of the key US ISM manufacturing index due out later this afternoon, dealers said. The euro zone equivalent of the ISM, the PMI, recorded a significant increase but only managed to lift the euro by a modest margin, they added. The euro zone manufacturing sector purchasing managers' index raced to 51.5 in May from 50.7 in April, although still below forecasts of a 51.8 reading. Meanwhile, the German manufacturing sector purchasing managers' index rose to a seasonally-adjusted 49.8 points in May from 49.1 in April, below market consensus of a 50.0 reading - a clear indication that Germnay continues to lag the recoveries seen in Italy and France. Looking ahead, the US ISM index will be the key figure for the day as it will show how far US recovery has become entrenched, dealers said. Wall Street analysts forecast the ISM rose to 54.8 in May from 53.9 in April, reversing two straight months of falls. If these expectations come true, the dollar may get a lift, dealers said. Divyang Shah, Global Strategist at IDEAglobal.com said the threat of Japanese intervention still looms as dollar-yen still looks strong. On Friday, it was the intervention and not the two-notch downgrade from Moody's which was responsible for the higher dollar-yen, he said. "The key is that the intervention was more aggressive than previously and is likely to become more aggressive on approach to 120," Shah added. Sterling was little changed as UK markets were closed to mark Queen Elizabeth's 50th year of reign.