FOREX-Dollar up vs euro, down vs yen as 2007 closes

NEW YORK, Dec 31 (Reuters) - The dollar rallied against the euro but slipped against the yen in the final trading day of 2007 on Monday, though dealers resisted making big bets until volume increases after New Year's Day.

The dollar was on track for its biggest annual decline in four years against a basket of major currencies on expectations the Federal Reserve will have to lower interest rates further to stave off a recession.

The Fed already has cut its benchmark federal funds rate by a full percentage point in three moves, beginning at its September meeting, in an effort to ease a credit crunch which began in August.

It was the second straight year of declines for the dollar index.

"It's a funny market right now, and I can't point to any fundamental factor for what we are seeing," said Stephen Malyon, currency strategist at Scotia Capital in Toronto. "We are in holiday trading mode until Wednesday."


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