The Dollar Index declined for a third day after Moody’s Investors Service put the U.S. under review for a credit downgrade, damping demand for the nation’s currency. The greenback held yesterday’s loss against the euro after Federal Reserve Chairman Ben S. Bernanke said the central bank is prepared to take additional action, including buying more government bonds, to boost the economy. Japan’s currency slid about 1 yen per dollar within a few minutes at the start of London trading amid speculation the nation will intervene in markets to limit its gains. A report today may show U.S. retail sales dropped in July. The Moody’s comments “reinforce the dollar-negative sentiment,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “The dollar has staged quite a sharp reversal and the market is now on heightened quantitative-easing watch, which will leave the dollar vulnerable to weaker U.S. data,” he said. IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners including the euro, yen and pound, slid 0.3 percent to 75.004 as of 9:23 a.m. in London. The dollar was at $1.4207 per euro from $1.4167 in New York yesterday, when it dropped 1.4 percent, its biggest loss since Jan. 13. It fell as low as 78.47 yen, the least since March 17, before rebounding to trade at 79.11 yen, from 78.98 yen yesterday. The yen traded at 112.39 per euro, from 111.86. Rating on Review The U.S., rated Aaa by Moody’s since 1917, was put on review for the first time since 1995 on concern the nation’s debt threshold will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes, even though the risk is low, Moody’s said yesterday. Bernanke will testify for a second day to U.S. lawmakers today, speaking before the Senate, after appearing before the House Financial Services Committee yesterday. The Fed is prepared to take additional action if the economy appears to be in danger of stalling, he said yesterday. U.S. President Barack Obama and congressional leaders have as yet failed to reach a compromise on reducing deficits and raising the $14.3 trillion federal debt ceiling before the government exceeds its borrowing authority on Aug. 2. Obama is considering summoning congressional leaders to Camp David this weekend to work on a plan to raise the debt ceiling after yesterday’s negotiations on a deficit-cutting plan of at least $2 trillion stalled, according to two people familiar with the matter. Retail Sales U.S. retail sales fell 0.1 percent in June, following a 0.2 percent decline in May, according to a Bloomberg News survey before the Commerce Department report today. “If the data is soft, it would give the market more of an excuse to anticipate more quantitative easing,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “More important is the debate about the U.S. debt ceiling, any signs that they can’t get toward an agreement may affect risk appetite.” Japanese Finance Minister Yoshihiko Noda said it would be “problematic” if recent one-sided currency movements continue. That fueled concern Japan will sell yen to halt gains. Noda repeated today he will continue to closely watch the market. Japan last sold yen to slow its rise when the Group of Seven nations joined in coordinated action on March 18 after the yen surged to a postwar record of 76.25 per dollar the previous day. Yen gains threaten Japan’s recovery from the March 11 earthquake and tsunami. “It’s not confirmed intervention at this stage and we haven’t had any commentary from Japanese officials,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “Clearly the market is nervous as we probe the lowest levels since March 17 and certainly the jawboning from officials has stepped up.” A Japanese government official said authorities can intervene in currency markets without warning. Speaking to reporters in Tokyo on condition of anonymity, the person declined to comment specifically on any intervention. To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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