LONDON, Oct 2: The dollar continued to recover on Tuesday from its record low against the euro, boosted by positive trading on Wall Street and European interest rate decisions later this week, dealers said.

In late European trading, the euro slid to $1.4164 in European deals, compared with $1.4231 in New York late on Monday, when it had hit a record high $1.4283.

The US currency gained to 115.83 yen, from 115.71 yen late in New York on Monday.

Later Tuesday, the foreign exchange market will digest US pending home sales for August.

“Added to the drop in existing and new home sales, this could give further indication of the slowdown in the US housing market, adding yet another bad egg to the basket of US housing,” cautioned ABN Amro analyst Greg Gibbs.

Dealers will be looking for clues about the outlook for the US economy and the Federal Reserve’s next policy move at its meeting later this month.

The Fed slashed its fed funds rate 50 basis points to 4.75 per cent last month and investors expect further cuts if economic data turns out to be poor, dealers said.

Investors also awaited monetary policy decisions from the European Central Bank and the Bank of England on Thursday. The ECB is widely expected to hold rates at 4 per cent and the BoE is also forecast for no change from the current 5.75 per cent.

The US currency has garnered support from a strong performance on Monday by Wall Street, where the Dow Jones index hit a record closing high above 14,000 points as investors anticipated another cut to US rates.

On Tuesday investors cashed in some profits but the Dow remained above 14,000 points.

Investors were optimistic that the recent financial turbulence, linked to the troubled US sub prime or high-risk home loan sector, appeared to have passed.

“The strong investor confidence that is blaring from Wall Street should continue to underpin the yen-funded carry trade,” said John Noonan, an analyst at Thomson IFR.

In late European trading on Tuesday, the euro was changing hands at $1.4164, against $1.4231 late on Monday, 164.08 yen (164.70), 0.6936 pounds (0.6964) and 1.6640 Swiss francs (1.6626).

The dollar stood at 115.83 yen (115.71) and 1.1753 Swiss francs (1.1682).

The pound was being traded at $2.0419 (2.0429).—AFP