Euro Drifts Lower Against US Dollar

The euro bought US$1.4217 in late morning trading in Europe, below the US$1.4252 it bought in New York trading the night before, and down from the record US$1.4348 it bought early Monday.

The British pound reversed its course, dipping to US$2.0472 from US$2.0503, while the dollar fell to 114.38 Japanese yen from 114.71 yen late Tuesday.

Despite its drift lower, the 13-nation euro has been buoyed by expectations that the European Central Bank will raise its interest rates again, even as worries about the U.S. economy feed speculation that the Federal Reserve will soon decide on another cut in its rates.

Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.