The dollar continued its slide against the major European currencies on Tuesday as the markets waited for Federal Reserve chairman Ben Bernanke's biannual speech on inflation and the economy.

In trading against the euro, the greenback fell to a record low of 1.3834 before rising slightly to around 1.3820.

Tokyo trading also saw sterling reach a fresh peak against the dollar, setting a new 26-year high of 2.0549.

Traders a widely expecting the Bank of England to have to introduce further interest rate rises to combat inflation and this is keeping the British currency strong.

However, the dollar did manage to make slight gains on the yen over the course of Tuesday, trading around 122.33 and making back some of the ground lost to the Japanese currency last week.

When Mr Bernanke makes his speech to Congress tonight, traders will be particularly interested in any comments he makes regarding inflation and the state of the subprime mortgage market in relation to the wider housing industry.