The dollar may extend a two-year decline against the euro on speculation a slowing economy will make U.S. assets less attractive to investors.

The U.S. currency fell versus 14 of the 16 most-actively traded currencies in 2007 as the Federal Reserve reduced borrowing costs three times to temper the worst housing slump since 1991. The unemployment rate probably increased last month to the highest since July 2006, according to the median forecast in a Bloomberg News survey before the government reports the data on Jan. 4. [MORE]