Nov 19 (Reuters) - While the ballooning current account surplus affords the euro a lot of support, it is also likely to irk the next U.S. administration which may impose stiffer penalties as result.

Any trade dispute may well drive the dollar - the world's reserve currency - higher and should it do so then the surplus may grow much larger, far exceeding the current record 52 billion euro surfeit.

This potentially vicious circle could prove very damaging for any parties involved and the risk aversion stemming from it could topple stocks from the currently lofty perches they sit on, and that could boost the dollar far more.

That'll make it far more difficult for U.S. firms to compete with companies in China, the euro zone and Switzerland where surpluses have grown massively.

This could limit what the new Donald Trump administration may be able to do and that might undermine the dollar, which many have traders have recently purchased. Should Trump follow through on his promises of huge tariffs, then the dollar might rocket, which might lead to a much more overcrowded position in the greenback than held currently.

At that point, dollar positions will be more greatly influenced by the massive surpluses that might grow during the period where protectionist policies greatly influence the world economy.

Trump may need to abandon the strong U.S. dollar policy.

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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

((jeremy.boulton@thomsonreuters.com))