new york (Bloomberg) — The dollar fell to a record against the euro and to an eight-year low compared with the yen as the US lost jobs for the second straight month in February, adding to concern that the economy is in a recession.

The US currency fell for the fourth straight week against the euro as the labour report bolstered speculation the Federal Reserve will cut interest rates by 0.75 percentage point to 2.25 percent this month. The euro gained after European Central Bank President Jean-Claude Trichet held rates at a six-year high of four percent and said there is "strong upward pressure on inflation," signalling he's in no hurry to cut rates.

"The news of the US economy is unremittingly bleak," said John McCarthy, director of currency trading at ING Financial Markets LLC in New York. "The dollar looks under pressure."

The dollar touched $1.5459 per euro on Friday, the weakest level since the euro's debut in 1999, before recovering to trade at $1.5355, for a 1.2-percent drop this week. The US currency traded at 102.67 yen, after falling to 101.43 yen yesterday, the lowest since January 2000.

The dollar also sank to a historic low of 1.0135 Swiss francs after the government said the US lost 63,000 jobs in February, following a drop of 22,000 in January. The median estimate in a Bloomberg survey was for a gain of 23,000 last month.

Europe's 15-nation currency reached an all-time high of 76.92 UK pence and set a record high versus the dollar in eight of the past nine trading days.

"There is the view that we're quickly sinking into recession and that the Fed only has a limited ability to offset that," said Michael Woolfolk, senior currency strategist in New York at the Bank of New York Mellon Corp. the world's largest custodial bank with over $20 trillion in assets under administration. "We will certainly see more dollar weakness from here."

In a bid to counter a deepening credit crisis, the Fed on March 7 boosted the size of auctions of four-week funds to banks planned for March 10 and March 24, to $50 billion each from $30 billion previously. The Fed also said it will make $100 billion available through repurchase agreements.

Futures show traders see a 92 percent chance the Fed will lower its target rate to 2.25 percent on March 18. The balance of bets is on a cut to 2.5 percent, from three percent now.

The euro's 14-day relative strength index, a gauge of the speed of the currency's rally against the dollar, was above 70 for the eighth straight day yesterday, signalling the euro may be poised to decline. The last time the gauge held above 70, the five days ended November 26, the euro fell about three percent against the dollar in the following three weeks.

"The market has gone a long way without taking a breath," said Carl Forcheski, vice-president on the corporate currency sales desk at Societe Generale SA in New York. "It needs to take a break."

The euro has gained 17 percent against the dollar in the past year, undermining European exports. The synthetic euro, which estimates the European currency's value before its inception in 1999, advanced to the strongest level since at least January 1989, when Bloomberg's data on the measure began.

"Excessive moves are undesirable for growth," Trichet said at an event in Paris on March 7. "I approve the strong dollar policy of authorities" in the US.