* Rangebound trade could continue this week -strategist
* Investors await Italian debt auction this week
* Dollar index holds above support at Ichimoku cloud top
By Lisa Twaronite
TOKYO, Dec 27 (Reuters) - The dollar remained caged in recent ranges against major rivals in thin trade on Tuesday, with the euro holding above an 11-month low in the final trading days of 2011.
The greenback often trades in volatile way against the yen during the last three business days of the year, strategists say, but some believe this year might be an exception.
“The New Year’s holidays this year are over the weekend, meaning that Japan’s last trading day of the year lines up with everyone else’s, so we might not see the last-minute activity when Japan is on holiday as in past years,” said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo.
The dollar has wavered in a tiny band of around 2 yen since Oct. 31, when Japanese financial authorities intervened in foreign exchange markets to prevent the yen from strengthening further. It has lost more than 4 percent against the yen so far this year.
Against its Japanese counterpart, the dollar bought 77.89 yen, compared with 77.99 yen in late Asian trading on Monday, when markets in London and New York were closed for holidays.
The euro was steady at $1.3072, holding above an 11-month low of $1.2945 hit this month, as well as its 2011 low of $1.2860.
The European unit has shed more than 2 percent this year against the dollar, as European leaders struggled to contain the region’s debt crisis.
Speculative positions as seen in the latest IMM data still favour the greenback, meaning the euro could get a short-covering boost, with stop-loss orders said to be placed around $1.3120.
Looking ahead, Italy will sell three- and 10-year bonds on Thursday, and a successful auction could give the euro a lift.
The Aussie was down 0.2 percent at $1.0148. The dollar index stood at 79.83, nearly flat from 79.86 on Monday, and below an 11-month peak of 80.73 hit this month. But the index remained above support at 78.76, the top of its weekly Ichimoku cloud.