The dollar gained more ground Monday as markets looked ahead to Tuesday's meeting of the U.S. Federal Reserve, which is widely expected to raise interest rates.
The gains came as a top German think tank lowered its 2005 growth outlook for the country, the European Union's largest economy, due to poor economic growth at the end of last year and high oil prices.
The euro was at $1.3230, down from $1.3311 in late New York trading on Friday. The dollar bought 104.94 Japanese yen, up slightly from 104.68 on Friday, and the British pound dropped to $1.9129 from $1.9196.
The Hamburg-based HWWA, one of Germany's top six research institutes, on Monday revised its 2005 gross domestic product growth forecast to 0.6 percent from 0.9 percent predicted in December.
The forecast, together with that of the Kiel-based think tank IfW, is the most pessimistic offered by the six research institutes. The other four institutes forecast 2005 growth at between 1 and 1.9 percent.
The euro skyrocketed against the dollar last year, jumping from about $1.20 in September to an all-time high of $1.3667 at the end of December on worries over the ballooning U.S. trade and budget deficits.
It has since been hovering around the $1.33 mark, and gained ground last week on news of a record U.S. current account deficit. Markets pushed the dollar back up, however, ahead of the Fed meeting.
The focus is on whether the central bank continues to say it will raise borrowing costs at a "measured" pace or signals that it is prepared to raise rates more quickly.