``The cards are stacked against the dollar,'' said Scott Ainsbury, who helps manage about $12 billion in currencies at New York-based FX Concepts Inc. ``This is the real deal. It's definitely got more to go.''

The dollar dropped to $1.3321 per euro at 1:31 p.m. in New York from $1.3243 yesterday. Its record low is $1.3666 in December 2004. Against the British pound, the U.S. currency declined to $1.9848, the lowest in 14 years. The dollar also fell to 115.29 yen from 115.80 yesterday and touched a three- month low of 114.98.

The U.S. currency has dropped 3.8 percent in the past two weeks. It's the biggest two-week loss since April 14-28 after Group of Seven ministers raised concerns about the U.S. trade deficit and suggested Asian currencies needed to gain against the dollar.

The ISM factory index fell to 49.5 in November from 51.2 a month earlier. The median forecast in a Bloomberg survey was for a 51.5 reading. The report followed the National Association of Purchasing Management-Chicago yesterday which said its business barometer fell to 49.9 this month, the lowest since April 2003, from 53.5 in October.

`Dollar Bears'

Separate reports showed European manufacturing expanded for a 17th month and the unemployment rate declined to the lowest in more than five years.

Futures contracts show traders see a 100 percent chance of a cut to 5 percent in March, up from 73 percent before the ISM report and from 68 percent a day earlier.

The Fed left its benchmark rate at 5.25 percent in the past three months, after two years of increases. The yield premium on U.S. 10-year notes over German debt narrowed to 75 basis points, the smallest in 17 months.

``We're dollar bears,'' said David Durrant, an investment strategist in New York at Julius Baer Investment Management, which oversees about $40 billion. ``Right now all data that comes out is a dollar softener.''

U.S. data next week may show factory orders falling the most since September 2001, slowing services industry growth and an increase in unemployment, according to Bloomberg News surveys.

`Broader Risk'

``There is a broader risk of slowdown in the U.S. economy,'' said Mike Moran, a senior currency strategist at Standard Chartered Bank in New York. ``It keeps the dollar under pressure.''

The dollar remained lower after Federal Reserve Bank of Chicago President Michael Moskow said today economic growth should pick up toward 3 percent next year and higher interest rates may still be needed to tame inflation. The comments were similar to those he made on Nov. 16.

The euro jumped in earlier trading today on a Market News report citing unidentified people at the ECB as saying the bank isn't concerned about a $1.30 exchange rate. The threshold for the central bank is $1.50 to $1.55, according to the report.

``That means we don't have to be worried about interventions'' from ECB officials saying the euro is too strong, said Michael Malpede, a senior currency analyst in Chicago at Man Global Research.

Yen Drop

The yen dropped to a record low against the euro after a government report showed inflation unexpectedly slowed in October. Core consumer prices excluding fresh food rose 0.1 percent from a year earlier, slower than the 0.2 percent median forecast of economists in a Bloomberg survey.

The yen declined to 153.57 per euro from 153.35 yesterday, and touched a record low of 154.11 per euro today.

The pound rose to the highest since Sept. 10, 1992, a week before speculators led by billionaire investor George Soros drove the pound out of Europe's system of linked exchange rates.

The Bank of England raised its benchmark repurchase rate to a five-year high of 5 percent on Nov. 9, saying accelerating growth risks pushing inflation further above its 2 percent target.

The euro region's economy will start 2007 stronger than anticipated, the European Commission said yesterday. The forecast reinforced speculation the European Central Bank will continue raising interest rates into next year.

The ECB will raise rates for the sixth time in a year, to 3.5 percent on Dec. 7, according to the median estimate of economists in a Bloomberg News survey.

The unemployment rate in the euro area unexpectedly fell in October to 7.7 percent, the lowest in more than five years, a report showed.

To contact the reporter on this story: Min Zeng in New York at mzeng2@bloomberg.net ; Daniel Kruger in New York at dkruger1@bloomberg.net .