LONDON, April 17: The dollar fell to a new record trough against the euro here on Thursday on diminishing prospects for a cut in eurozone interest rates before regaining some lost ground on euro profit-taking.

The single European currency shot up at one point to 1.5984 dollars, the highest reading against the greenback since the creation of the euro in 1999.

The euro later traded at 1.5927 dollars against 1.5950 late Wednesday in New York, weakened a bit by profit-taking after its record-setting run.

The dollar was meanwhile at 102.22 yen, up from 101.81 on Wednesday.

“The notion of an ECB being on hold (over rates) for longer after the latest rise in inflation... is pushing the euro back towards 1.60 dollars,” Commerzbank economist Antje Praefcke said on Thursday.

The euro has struck a series of record highs above 1.59 dollars since official data showed eurozone inflation reached an annual rate of 3.6 percent in March -- the highest since the launch of the single currency in 1999.

Analysts said Wednesday’s inflation data was likely to mean the European Central Bank would hold borrowing costs for the foreseeable future at their current levels.

The ECB’s benchmark rate, 4.00 per cent, is already substantially higher than that of the US Federal Reserve, which stands at 2.25 per cent.

The higher interest rate offered in the eurozone -- and the likelihood that it will not change -- makes the euro a more attractive investment than the dollar, analysts said.

“The euro area is experiencing a rather protracted period of temporarily high annual rates of inflation, resulting mainly from increases in energy and food prices,” the ECB said in its latest monthly bulletin published Thursday.

The dollar also came under pressure from an index of current business activity published by the Philadelphia Federal Reserve Bank that unexpectedly declined to minus 24.9 in April from minus 17.4 in March, against expectations for an improvement to minus 15.0.

The US currency was in addition hurt by weekly initial jobless claims figures, which showed an increase of 17,000 to 372,000.

Analysts said the euro could gain further support on Friday with the release of German producer price data.

Annual producer prices in the eurozone’s largest economy are expected to have risen 4.0 per cent in March from 3.8 per cent in February, with prices rising 0.5 per cent month-on-month.

In European trading on Thursday, the euro changed hands at 1.5927 dollars against 1.5950 late on Wednesday, 162.83 yen (162.38), 0.8000 pounds (0.8084) and 1.5972 Swiss francs (1.5948).

The dollar stood at 102.22 yen (101.81) and 1.0026 Swiss francs (0.9997).

The pound was at 1.9903 dollars (1.9727).

On the London Bullion Market, the price of gold rose to 946 dollars per ounce from 945 dollars late on Wednesday.--AFP