NEW YORK (CNN/Money) - Even as the war in Iraq winds down and investors start to feel safer, the chances of the dollar recovering strongly in the next year are fairly slim, analysts say.

The dollar rallied along with stocks in the days just before the current war on hopes that a conflict would be short, but as the war dragged on, that enthusiasm soon trailed off and so did the U.S. currency's brief advance. Even when equity markets tried for a comeback last week on progress in Iraq, the dollar failed to see anywhere near the same momentum. As the war comes to a close, the dollar is showing few signs of perking up.

"We had expected that we'd see at least a brief pop in the dollar around now, but that hasn't happened," said Jason Bonanca, currency strategist at Credit Suisse First Boston. "Good news on the U.S. economy could support the dollar short-term, but beyond that, we are set up for a period of sustained dollar weakness."

The one exception to this is the dollar's performance versus the Japanese yen, a ratio that has seen only limited volatility due to intervention moves on the part of the Japanese government in an attempt to stem the rapid advance of the yen and protect the country's exports. Dollar-yen movement should continue to be limited, Bonanca said.

During the first Gulf War in the early 1990s, the dollar slid sharply in the initial two-thirds of the conflict, only to recover with gusto as the battle drew to a close and in the months that followed. But despite other similarities between the state of the U.S. economy amid the first Gulf War and this one, the dollar is unlikely to find the same strong support when this war ends.

"In the run-up to both wars, the environment was characterized by great economic uncertainty and the pull of recession," said Bonanca. "What's different now is that we're dealing with a greater deficit, an international investor that is unwilling or unable to make the same kind of investments in the U.S. it once was and a closer proximity to a lingering profit bubble. So the dollar is fairly rangebound, and it will probably go lower over the next 12 months."

The dollar slid 3 percent between Iraq's invasion of Kuwait in August 1990 and the start of Operation Desert Storm in January 1991. It slid 2.6 percent further in the first four weeks of that war. But as the close began to draw nearer, international investors returned and the dollar managed to bolt nearly 15 percent in the next 2 1/2 months before returning to a slow and steady advance over the rest of the decade.

(To see how the U.S. dollar measures up to other major currencies, click here).

Bonanca estimates that the dollar will see a solid recovery closer to the end of the decade, but not a big surge before that. He forecasts that the dollar will lose another 10 percent versus the Japanese yen and 7 percent versus the euro in the next year.

"The hope is that once the war cloud is lifted, consumer confidence and spending will pick up, businesses will increase their technology spending and start hiring again, both in the U.S. and globally. And in that environment stocks and the dollar will rise," said Tom Benfer, vice president and global currency analyst at Bank of Montreal.

"But as you saw this morning, when the strong retail and consumer sentiment numbers produced little reaction beyond the initial surprise, that's not necessarily going to be the case," Benfer said.

Although the talk has been that in the last week, market focus has switched from the war back to the economy, investors don't seem to be trading as if that's the case, Benfer added. He said that most economists he talks to are looking for some kind of pickup in the second half of the year, but that he thinks that that may be too optimistic, with so many people still out of work and corporate earnings still languishing.

"We have a tough time ahead," added Credit Suisse's Bonanca. "There's a lot to move past before we even get to the point where we're in an environment where there is enough growth so that individuals and businesses will have the capital to invest."