The dollar traded near an all-time low against the euro Thursday, as investors debated the size of an expected Federal Reserve interest rate cut next week after soft durable goods data pointed to sluggish growth.
Falling U.S. stocks, used as a barometer of risk aversion, also pushed the greenback lower versus the yen.
Analysts said the unexpected fall in orders for long-lasting manufactured goods had sealed the case for further monetary easing at the Fed's Oct. 30-31 policy meeting.
"The much lower-than-expected durable goods data was a dollar negative...and it feeds into the notion that the Fed will cut rates by another 25 basis points on Oct 31," said David Powell, currency strategist at IDEAglobal in New York.
U.S. interest rate futures fully reflect a 25 basis point cut in the federal funds rate target to 4.50 percent, while the chances for a half a point reduction are around 55 percent.
In early New York afternoon trade, the euro was up 0.4 percent at $1.4319, edging closer to Monday's record peak of $1.4348, according to Reuters data. It climbed as high as $1.4344 in overseas trade at one point, helped by the drop in U.S. durable goods orders.
Analysts saw the euro trading in a $1.4245 to $1.4350 range for the remainder of the U.S. trading session. The dollar index, a measure of the greenback against a basket of six major currencies, fell 0.4 percent to 77.256, moving toward a record trough of 77.093, which was hit Monday.
The dollar earlier rose against the yen after a report showed U.S. new home sales and the median sales price rose in September while the inventory of homes for sale fell.
But those gains evaporated as stocks reversed gains and investors decided that revisions to previous months' new home sales figures had masked a general underlying weakness.
"Don't be misled by the superficial improvement in the new home sales between September and August. This is a extremely weak report," said Richard Iley, economist at BNP Paribas in New York.
"The only reasonable conclusions is that September's apparent 'improvement' will likely be revised away over the next two months."
The dollar last traded 0.3 percent down at 113.82 yen, off the day's high of 114.57 yen.
But high-yielding currencies such as the Australian dollar and New Zealand dollar gained despite the rise in risk aversion as investors focused on the outlook for the U.S. economy.