Major currencies were locked in narrow ranges against each other ahead of the keenly awaited US existing home sales figures this afternoon. The data is predicted to come in weak and if expectations are proven correct the dollar could be in for a bumpy ride this afternoon as hopes of a US rate cut strengthen. "Although consumption and employment data have been modestly positive so far this quarter, the Fed will be concerned that the housing market is still not showing signs of bottoming out," UBS analysts said. Economists polled by Thomson's IFR Markets said they are expecting an annual rate of 5.2 mln existing home sales in September, its lowest since November 2001. And against this backdrop, the real economy may not prove impervious indefinitely, they added. In the short term, each data representing a slowing US economy will likely weigh on the dollar but in the longer term the risk of a spillover effect on the global economy may well see the dollar gaining ground eventually. "We believe subsequent risk liquidation and repatriation will prove supportive for the dollar and we therefore target the euro returning to 1.35 usd in three months," UBS analysts said.. Elsewhere, the euro survived a mixed set of euro zone PMI data, showing the services sector holding up well but manufacturing continuing to suffer the effects of the credit crunch. The euro zone 'flash' PMI index on manufacturing dropped to 51.5, its lowest level in over two years during October, though the services PMI rose above expectations to 55.6. Both, nevertheless, remain above the 50 level which marks expansion in the sector. "A fairly neutral set of surveys, with the latest weakening in the manufacturing index not a major surprise in a context of soaring euro and softening global picture, while the more domestic-orientated service sector is holding well for now," said Audrey Childe-Freeman at CIBC World Markets.