NEW YORK (AFP) - The dollar regained some ground against the euro, after the single European currency earlier broke through the 1.25-dollar level and hit an eight-month high on news of a slowdown in capital inflows into the United States.
The euro traded at 1.2490 dollars at 2100 GMT from 1.2468 Friday, but had reached up to 1.2534 -- its highest level since February -- before retreating.
The dollar traded at 109.24 yen, against 109.34 Friday.
Data from the US Treasury Department revealed that net foreign capital flows into the United States fell to 59 billion dollars in August from a revised 63.1 billion in July.
"The numbers were not so bad on their own but they were a bit lower than the figures in July," said Naeem Wahid at HBOS, explaining the dollar's drop.
The numbers also come at a time when markets are increasingly concerned about the large US current account deficit, Wahid added.
Still, Wahid said he believed the euro would not be able to break new ground as profit taking was likely to set in if it went up too far.
For now foreign capital inflows cover the current account deficit but the level of cover is becoming smaller. Furthermore, the US trade deficit is ever increasing and, taken together, they put downward pressure on the dollar.
"The dollar continues to struggle in a climate of high oil prices and lackluster domestic economic growth," said Nas Jijjar, a senior foreign exchange dealer for CMC Group.
New York's main contract, light sweet crude for delivery in November, hit a record 55.33 dollars a barrel in electronic trade but then skidded to a close of 53.67 dollars, down 1.26 dollars on the day.
Among other major currencies in late New York trade, the dollar stood at 1.2315 Swiss francs from 1.2337 Friday.
The pound was at 1.7978 dollars from 1.8034 Friday.