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Dollar hits 14-month high against mark, ends little changed

NEW YORK: The dollar climbed to its highest level in 14 months against the German mark, but ended little changed against most major currencies after its sharp rise in recent sessions.

The dollar eked out a fresh 26-month high against the Japanese but succumbed to selling pressure, traders said.

"The dollar couldn't hold those higher levels and it looks like the rally is over for now. But the market seems to want to take the dollar higher," said Jay Wertheimer, senior foreign exchange trader at Banco di Sicilia.

A report showing German unemployment rose by 26,000 in March helped cement growing expectations for lower official German interest rates and fuelled early dollar buying.

By contrast, the U.S. economy seems relatively strong, with steady interest rates that tend to enhance the appeal of dollar-based assets.

"Right now the dollar has a firm basis on the idea the U.S. economy is performing better than expected," said Chris Widness, international economist at Chase Securities.

The dollar stood at 1.4977 marks late Wednesday, unchanged from late Tuesday, and at 108.38 yen, up from 108.32.

A sharp drop in the British pound also helped propel the dollar as high as 1.5068 marks during the session, the highest rate since the dollar touched 1.51 marks on Feb. 16, 1995.

The pound slumped badly amid fears that British Prime Minister John Major's Conservative party will lose ground in coming elections.

"We're seeing a lot of pressure on the pound. A lot of people are getting out of the pound and into the dollar," said Alex Scarsini, director of foreign exchange at Barclays Group.

The pound fell to $1.5130 from $1.5215 late Tuesday.

Against other currencies, the dollar rose to 1.2150 Swiss francs from 1.2114 francs and fell to Canadian $1.3572 from C$1.3588.

"Everyone was buying the dollar," Scarsini said.

But the currency was unable to continue rallying. Some traders cited the dollar's failure to break past 1.2250 Swiss francs, a key resistance point, as a reason for some selling.

The dollar remains generally buoyant, but faces some tough resistance at current levels, traders said.-Reuter