NEW YORK, Jan 24: The dollar ended higher on Friday against the euro and the pound on negative economic news from Europe, but the greenback remained under pressure from the rising yen.

The euro slipped to $1.2969, down from from $1.3001 late Thursday in New York.

At one stage, the single European currency slumped to $1.2765, the lowest since Dec 8.

Concerns about the health of major banks in both France and Germany -- the two strongest Eurozone economies -- combined with an expected slowing of European growth pushed the euro lower, said Andy Douglass of PNC Bank.

But Terri Belkas, currency strategist with Forex capital Markets, said a euro recovery seems increasingly possible. Belkas said any eurozone weaker-than-expected inflation figures next week could exacerbate the market’s speculation that the central bank will cut rates again on February 5, and weigh on the euro.

On the other hand, if CPI (consumer price index) does not fall further, the currency could gain as the markets assume the central bank will leave rates unchanged next month and wait until March to make monetary policy more accommodative, Belkas said.The British pound continued its slide, tumbling to $1.3793 from 1.3873 in New York late Thursday as official data showed Friday that Britain was in recession for the first time since 1991.

The key question for the currency market to consider as we move forward is whether today’s data represents the nadir of the economic contraction or simply the start of long drawn out recessionary cycle, said Boris Schlossberg, director of currency research at Global Forex Trading.

We fear the second scenario is far more likely and while the pound may stage a dead cat bounce in the next few sessions given its woefully oversold condition, further downside is likely, as the pressure on the UK economy will only intensify in the first half of 2009, he said.

The dollar dipped slightly to 88.76 yen from 88.89 yen a day earlier.

The 87.00 level for the dollar-yen could very well be their breaking point, said Kathy Lien, also from Global Forex Trading, as she highlighted the prospect of Japanese central bank intervention to check the yen’s persistent rise.

Over the past six months, we have seen a significant appreciation in the yen to the point where the central bank can no longer ignore it, Lien said, citing as an example the yen’s more than 40 per cent appreciation against the pound.

The dollar rose to 1.1533 Swiss francs from 1.1521 on Thursday.

—AFP