The euro fell to 88.15 U.S. cents, below a previous low of 88.37 cents it reached last Thursday, after the European Central Bank raised its official minimum bid rate by a quarter percentage point. The euro also weakened to 93.30 yen - its fourth new low in two weeks against the Japanese currency.

"The euro's in real trouble, and the ECB is unable right now to support it," said Jeremy Fand, global head of foreign-exchange strategy at UBS Warburg LLC in Stamford, Conn. He said the market would probably ignore any verbal intervention by euro-zone officials right now, and would even challenge actual intervention. The euro had risen sharply on Friday after lows hit earlier last week. But when that rally failed to gain strength Tuesday after the long U.S. holiday weekend, traders in London and New York started selling the European currency. Mr. Fand said the euro could fall to 85 cents in the near term. While the euro has been weakened by its inability to break above key resistance at 90.50 cents, it also has been weighed down by market perceptions of conflict among European officials.

Comments made Monday by German Chancellor Gerhard Schroeder that in the context of growing exports, the value of the euro "should be more reason for joy than reason for concern," were seen as being atodds with the ECB's concern over the currency's weakness. "I was just in the process of saying maybe the euro was going to bottom out a bit, with the data from the U.S. starting to soften," said Andrew Busch, director of foreign exchange at Bank of Montreal in Chicago. "But it's these official political comments that really got me concerned," he said, referring not just to Mr. Schroeder's comments, but to statements made last week by Deutsche Bundesbank President Ernst Welteke. As the euro fell against the dollar last week on the back of the ECB rate rise - which disappointed some market players who had hoped for a half-point increase - Mr. Welteke appeared on German television and said the euro should appreciate once the growth gap between the U.S. and the euro zone starts to narrow. Mr. Busch said the euro-zone officials were "basically throwing in the towel" on the euro and making comments at the worst possible time.(The Wall Street Journal)