The US dollar fell against the euro on Wednesday as the markets speculated on forthcoming Federal Reserve activity.

Analysts expect the Federal Reserve to lower the interest rate on loans between banks in an effort to curb fears about the US credit market.

The dollar dropped to 1.3492 against the euro from 1.3466 in late Tuesday trading, and some believe it may slide to 1.3550 by next week.

"The dollar is likely to struggle against the euro,'' according to currency strategist Kengo Suzuki.

He explained: "It's become a question of when the Fed will lower rates and this is a negative development for the dollar.''

Meanwhile, the yen has continued its slide against the dollar and the euro - as expected - as speculation the Bank of Japan is not going to raise interest rates mounts.

The yen slid to 114.88 against the dollar and to 155 against the euro, down from 154.08 in Tuesday trading.

Japan's base rate is currently just 0.5 per cent, making it the lowest in the developed western world.