Dollar slumps as data points to slowing U.S. growth

By Kevin Plumberg

NEW YORK (Reuters) - The dollar fell on Tuesday to a two-year low against a basket of major currencies after soft data on housing and consumer confidence underscored a trend of slowing U.S. economic growth.

Reports on existing-home sales and consumer sentiment both came in lower than expected and pushed the dollar down against the basket for the 10th time in the past 11 sessions. The dollar also dropped closer to a record low against the euro.

The currency may be entrenched in a long-term weakening trend, analysts said, given a spate of anemic U.S. economic numbers that has bolstered expectations the Federal Reserve will cut interest rates this year.

"The Fed will need to cut interest rates some time this year to jump-start the economy. I wouldn't be surprised to see the dollar testing its all-time lows against the euro once again this week," said Greg Salvaggio, vice president for currencies at Tempus Consulting in Washington.

By late afternoon, the euro rose 0.4 percent from late Monday to a two-year high of $1.3644, creeping closer to its all-time high of $1.3670, according to electronic platform EBS. Against the yen, the dollar was mostly unchanged at 118.57 yen

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The dollar index dropped to a two-year low of 81.442 .DXY. A move below 80.390 would mark its lowest since April 1995, according to Reuters data.

In tandem with the dollar, yields on 10-year U.S. Treasuries <US10YT=RR> closed at 4.6222 percent, the lowest since March 30, offering foreign investors less of an incentive to buy U.S. debt.