The American dollar hit a new low record against the euro and also lost ground against the yen in overnight trading, as investors continue to weigh the implications of possible U.S. interest rate cuts next week.

The euro was at $1.3872 from $1.3836 at Tuesday's closing bell, while the dollar was at 114.17 yen, from 114.26 yen. The British pound was at $2.0303 from $2.0323, while the dollar was quoted at 1.1843 Swiss francs from 1.1891 francs.

The dollar fell for the sixth consecutive day, establishing the longest losing streak since April, after the National Association of Realtors cut its home sales forecast Tuesday reinforcing speculation the U.S. Federal Reserve will cut its benchmark rate next week.

The American currency also plunged to a 15-year low against a basket of currencies in the middle of continued problems in the global credit market. "There is dollar pessimism in the market," said Gavin Friend, the chief currency strategist at London’s Commerzbank.

"Investors have increased sentiment that the US economy is entering a recession and against that interest rates in Europe are expected to rise further," said Kazuhiko Shibata, Tokyo branch manager of Dresdner Bank.

The euro, on the other hand, exceeded its previous all-time high of $1.3853 against the dollar during Asian trading, climbing to $1.3880.

Next Tuesday, the US Federal Reserve will cut US borrowing costs from 5.25 percent, while the ECB is estimated to lift eurozone borrowing costs in the following months to at least 4.25 percent, according to dealers.

Widening interest rate differentials mean that currency investors can gather higher income from the euro rather than the pressured dollar.