* Dollar rally stalls after weak U.S. home sales data Weds
* Euro rises above $1.44 but on course for big monthly fall
* Holiday volumes; U.S. weekly jobless claims at 1330 GMT
By Jessica Mortimer
LONDON, Dec 24 (Reuters) - The dollar fell on Thursday, coming off three-month highs against a basket of currencies after weak U.S. housing data the previous day dampened optimism about the outlook for the U.S. economy.
In extremely thin pre-holiday trade on Thursday, the market awaited U.S. jobless claims and durable goods data.
Figures on Wednesday showed sales of new homes unexpectedly fell 11.3 percent in November to their lowest level in seven months [ID:nN23158201].
The housing data pushed the euro and the yen higher against the dollar, taking them off multi-week lows hit earlier in the week, although trading was extremely quiet ahead of Friday's Christmas holiday in Europe and the United States.
"The new home sales data was the catalyst to push the dollar lower - the market has become used to a flow of upside surprises in U.S. numbers recently and this has just taken a bit of the shine off the dollar," said Adam Cole, global head of FX strategy at RBC Capital Markets.
"But until we get back to more normal liquidity conditions it is difficult to draw too many conclusions from the current price action," he added.
The dollar index <.DXY>, a gauge of its performance against six other major currencies, was down 0.4 percent by 1101 GMT at 77.559, sitting below this week's three-month high of 78.449.
The euro <EUR=> rose 0.5 percent to $1.4405, holding just above its weakest levels since early September after dipping near $1.42 this week, dented by concerns about sovereign ratings after a third ratings downgrade on Greek debt.
The single currency's falls in recent days, however, still left it down around 4 percent against the dollar so far this month and on course for its biggest monthly fall since January.
U.S. DATA AHEAD
Thursday's focus will be on weekly U.S. jobless claims and durable goods data at 1330 GMT as the market tries to gauge if a recent improvement in monthly payrolls will be sustained and what that means for the timing of U.S. rate increases. <ECONUS>
Data in early December showing the U.S. lost far fewer jobs than expected last month fanned optimism among investors that the battered labour market was turning around, triggering a broad dollar rise which has lasted most of December.
The dollar remained close to recent highs, but some analysts said charts showed momentum for the dollar's move up against the euro and yen -- aided by year-end closing of short positions against the greenback -- may be tailing off.
"I'm not sure if yesterday was the end of position adjustment or not but I think the adjustment of the dollar and the U.S. yield is probably near the end," said Tohru Sasaki, chief FX strategist Japan at JP Morgan Securities in Tokyo.
The dollar slipped 0.5 percent to 91.21 yen <JPY=> after touching a two-month high of 91.88 yen this week. Japanese markets were closed on Wednesday for a public holiday but will be open on Friday when London and New York are shut.
Traders said options expiries in dollar/yen later Thursday at 90.50, 91.00 and 91.50 yen may rein in moves in the pair.
The dollar has rebounded from a 14-year low of 84.82 yen set at the end of November. It climbed above its 100-day moving average on Monday, after mostly trading below that level since June, and the average is now around 90.90 yen.
(Additional reporting by Charlotte Cooper in Tokyo)