The U.S. currency also traded near the lowest level in almost two weeks versus the yen before a government report that will probably show U.S. house prices fell in the first quarter, indicating the economy may weaken further. The Australian dollar traded near its highest in a quarter century before an industry report on the nation's consumer inflation expectations for May.
The dollar fell to $1.5798 per euro, the lowest level since April 24, before trading at $1.5780 at 8:54 a.m. in Tokyo from $1.5795 in New York yesterday. The U.S. currency was at 103.06 yen from 103.05 yesterday. The euro traded at 162.63 yen from 162.76. The U.S. currency may fall to $1.59 per euro and 101 yen in one month, Umemoto said.
The dollar traded at $1.9713 against the British pound from $1.9732, and was at 1.0258 versus the Swiss franc from 1.0250. The Dollar Index traded on ICE futures in New York, which tracks the dollar against currencies of six trading partners, fell to 71.911, from 71.938 yesterday.
A report from the Office of Federal Housing Enterprise Oversight today will show U.S. house prices declined 1.3 percent in the first quarter from the prior quarter, according to the median forecast of 13 economists surveyed by Bloomberg. It would be the third quarterly decline since Bloomberg started tracking the survey in 1993.
The euro held gains against the dollar as the price of crude oil increased to more than $134 a barrel yesterday and German business confidence unexpectedly rose, bolstering speculation the European Central Bank won't lower interest rates. The Federal Reserve cut 2008 growth forecasts in the minutes of its last meeting.
The dollar fell yesterday after minutes of the Fed's April meeting showed most policy makers viewed the decision to cut the benchmark interest rate to 2 percent as ``a close call,'' judging risks between weaker growth and faster inflation had become more balanced.
The central bank cut its 2008 economic growth projections to a range of 0.3 percent to 1.2 percent from its January forecast of 1.3 percent to 2 percent. The interest-rate reductions this year, a total of 2.25 percentage points, were the most aggressive in almost two decades.
The correlation coefficient between oil prices and the euro-dollar exchange rate has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time.