The euro fell slightly against the dollar Thursday after the U.S. Federal Reserve cut its economic forecast and said unemployment could get worse.
The statements caused a drop in stock markets, which tends to boost the dollar as investors seek the safety of the U.S. currency.
The 16-nation euro bought $1.3799 in European morning trading Thursday, down from $1.3807 late Wednesday in New York.
The Fed's prediction Wednesday that the jobless rate could approach 9.6 percent _ worse than its previous forecast of 8.8 percent _ was especially ominous for banks since the earlier estimate was used in the government's "stress tests" to determine how healthy banks are.
The British pound was buying $1.5636, down from $1.5794 after credit ratings firm Standard & Poor's said Thursday it has revised the country's outlook to negative from stable.
Though the ratings agency reaffirmed the country's actual long-term credit rating at "AAA" and its short-term rating at "A-1+," it said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis.
Elsewhere, the dollar slid slightly against the Japanese currency, buying 94.62 yen compared to 94.89 late Wednesday.
