The dollar dropped to a record low versus the euro for the seventh consecutive trading session on Friday on expectations that continued weakness in the economy will force U.S. central bankers to continue to provide more motivation to investors by cutting interest rates.

The economic outlook got mixed signals from a pair of government reports on Friday. The Commerce Department said consumers continued to spend freely in August despite a worrisome housing downturn and trouble roiling the credit markets.

In a separate report, the government agency also indicated a drop in the rate of growth of consumer prices which could still be high enough to prompt another round of rate cuts.

Consumer spending rose by 0.6 percent in August - the highest figure in four months - which beat expectations of a 0.4 percent increase. Meanwhile, the price index for personal-consumption was up 1.8 percent, down from July's 2.1 percent growth rate. The rate was at the high end of the U.S. Federal Reserve’s comfort zone of 1 to 2 percent.

With the mixed economic signals failing to assuage uncertainty about the outlook, the euro traded as high as $1.4278 dollars before settling at $1.4266. It's the first time that the dollar has crossed the $1.42 mark since the 13-nation euro was introduced in 1999.

The U.S. dollar has been in a free fall since policy makers at the U.S. Federal Reserve decided to prevent the economy from falling into a recession by giving banks easier access to funds. The Fed lowered their benchmark overnight lending rate by half a percentage point to 4.75 percent on September 18.

The shift in policy scared off U.S. dollar holders causing a record sell off, prompting investors to shift funds to stocks and commodities.

One measure of the dollar’s strength against six of the most traded currencies since 1973 painted a grim picture. The Dollar Index of the New York Mercantile Exchange fell to an all-time low of 73.134 on Friday.