The dollar rose modestly against major currencies, recovering from overnight falls but still failing to make a sustained break against the euro beyond recent trading ranges The dollar fell sharply overnight following reports that a US Senate office building had been evacuated when air quality sensors there detected the presence of a possible nerve agent, though tests on this subsequently proved negative The news offset the market's relief when yesterday's 10-year auction saw good demand, producing a high 41 pct level of indirect bids, much improved after the previous day saw just 22 pct in indirect bids in the three-year auction. Analysts at WestLB noted, however, that the market remains nervous ahead of tomorrow's US trade report, while the euro has strong support at the 1.1950 usd level Meanwhile, the yen firmed after Bank of Japan governor Toshihiko Fukui intimated that provided CPI inflation evolves in a positive fashion, reductions in the degree of quantitative easing are possible from April Fukui said core consumer prices were showing signs of picking up and, although a policy switch is unlikely in March, he noted that the trend in inflation will have become clearer by then The earlier monetary policy statement had produced no surprises, however, with the policy board still voting by 7-2 to leave its ultra-easy monetary policy unchanged "Although today's report and Governor Fukui's subsequent comments came with the usual stipulations that any change in policy will not be taken lightly, speculation is destined to grow nonetheless that a near-term policy-shift is in the pipeline," said Neil Mellor at the Bank of New York Elsewhere, the pound fell back slightly after a key UK housing market survey appeared to suffer a setback in the new year, suggesting that there may be scope for a Bank of England rate cut in the coming months after all