The dollar fell to a new low against the euro and dipped lower against the yen on Friday amid more trouble in the financial sector as JPMorgan Chase and the New York Federal Reserve teamed up to bail out struggling investment bank Bear Stearns.

Traders making bets on Fed Funds futures raised their anticipation that the U.S. Federal Reserve will move to cut interest rates by 1 percent when it meets on March 18 in order to forestall a possible economic recession, which some economists already say has started.

The dollar fell as low as $1.5688 per euro, the lowest since the euro began trading in 1999. It was trading at $1.5645 at 10:59 a.m. in New York compared to 1.5635 late Wednesday. The U.S. currency also dropped against the yen, trading at 100.11 from 100.65 yesterday. The dollar dipped as low as 99.57 yesterday, a twelve year low.

The New York Fed will provide funds through JP Morgan for up to 28 days, according to a statement released by the company. Bear Stears said today that its cash position had significantly deteriorated.