LONDON, Dec 22 - The dollar remained under pressure on Monday as a heightened security alert in the United States encouraged a thin market to push the greenback within half a cent of last week's record low against the euro. The U.S. government raised its terror alert on Sunday to "orange", the second-highest level, saying there was a high risk in the holiday period of an attack that could be even bigger than the events of September 11, 2001. With little in the way of economic data and the Christmas holidays just days away, wariness of choppy trade prompted traders to err on the safe side -- which in recent weeks has been to refrain from buying dollars. "We saw a reaction to the heightened security alert in Asia but the move was not sustained and the market is very thin," said Ryan Shea, senior international economist at Bank One in London. The dollar, which has hit a series of all-time lows against the euro, seven-year lows against the Swiss franc and 11-year lows against sterling in recent sessions, was down a third of a percent at $1.2412 to the euro at 0850 GMT.
Last Thursday, the euro rose as high as $1.2438, according to data, notching its 13th record high in 15 trading sessions. Technical analysts noted that the $1.2450 area, the equivalent of the German mark's 1987 high against the dollar, marked chart resistance and many doubted whether it had sufficient momentum to overcome this level just yet.
DOLLAR WOES
Economists expect U.S. gross domestic product data on Tuesday and durable goods orders on Wednesday to reinforce the view that the world's biggest economy is recovering fast. However, few expect a reprieve for the dollar with many arguing that a combination of ultra-low U.S. interest rates and a strong global recovery will make it even harder for the United States to attract enough capital to offset its current account deficit. "The current account deficit is a long term factor and the fundamental drivers of dollar weakness remain strong," said Bilal Hafeez, foreign exchange strategist at Deutsche Bank. "It's quiet both because of the time of year and the lack of data, and people don't want to fight the trend." The dollar hovered in a narrow range around 107.60 yen , less than a yen away from three-year lows set earlier this month. The market showed little reaction to weekend confirmation by the Japanese government that it would raise the borrowing limit for its foreign exchange intervention account. Japan's willingness to sell yen for dollars to maintain export competitiveness means European currencies have borne a disproportional weight of the dollar's decline. The euro has risen more than 18 percent against the dollar since the start of the year, compared with the yen's advance of less than 10 percent.//