The euro rose to a record high against the dollar today as expectations for the Federal Reserve to start cutting interest rates next week continued to erode the US currency's appeal.
The euro rose as high as $1.3889 in trading today, the highest since the launch of the single European currency in 1999.
The dollar remained pressured on expectations the Fed would cut interest rates at its September 18th meeting to counter the US growth slowdown after last week's data showed US payrolls shrank for the first time in four years in August.
"With the market's attention turning to the US economy, European currencies, and especially the euro, are attracting buying," said Akira Kato, senior manager for the Bank of Tokyo-Mitsubishi UFJ's foreign exchange trading department.
Lending support to the euro were remarks by European Central Bank President Jean-Claude Trichet, who said yesterday that the ECB's monetary policy remained accommodative.
The yen initially slipped today on news Japanese Prime Minister Shinzo Abe would resign, but regained ground as the euro hit the record high against the dollar.
The euro rose to around 158.20 yen from around 157.90 yen before the news, and was later trading nearly unchanged at 158.00 yen.
With investors still worried about turmoil in credit and money markets stemming from problems in the US subprime mortgage sector, Mr Abe's resignation alone was not likely to play a crucial role in shifting market focus to the yen, traders said.
The dollar's trade-weighted index against six major currencies fell to a fresh 15-year low and stood at 79.459.
The dollar rose to around 114.30 yen from around 114.10 yen on the news of Mr Abe's resignation, but was trading down 0.3 per cent at 113.90 yen as of 0540 GMT.