The dollar fell to near record lows against the euro this evening after Federal Reserve Chairman Ben Bernanke said US economic growth would remain sluggish, supporting views for a December interest rate cut.
Speaking before a congressional panel, Mr Bernanke said the housing market contraction appeared likely to become even more severe and the Fed expected growth to slow "noticeably" in the fourth quarter compared to the previous three-month period.
He also said the Fed - the US central bank - saw growth being sluggish in the first part of 2008, with strengthening likely only as prospects for the housing sector improved.
Analysts said Mr Bernanke's comments had increased the chances of further monetary policy easing next month. This would reduce the yield appeal of dollar-denominated assets even more after the Fed slashed the federal funds rate target by three quarters of a percentage point to 4.50 percent since September.
The euro pushed to session highs at $1.4703 and was last trading at 1.4676, up 0.2 per cent on the day. It touched a record high of $1.4730 yesterday.
Earlier, the dollar found a brief respite after the European Central Bank held interest rates steady at 4 per cent and did not signal monetary policy tightening in December.
ECB President Jean-Claude Trichet warned against "brutal" currency market moves and said it had become even clearer that a strong dollar was in the United States' interests. He reiterated that the ECB stood ready to tackle inflation.