The Dollar edged lower against the Euro and trimmed gains versus other European currencies on Wednesday as comments from a Federal Reserve official and a key economic report affirmed expectations for further rate cuts. However, it posted steep gains against the Yen, buoyed by sharp gains in the stock market, with investors going back into riskier assets.

Fed Vice Chairman Donald Kohn said renewed financial market turmoil could slow the US economy more abruptly than thought, signaling a willingness to cut US interest rates further. His comments were consistent with the Fed's Beige Book report, which said the US economy from October to mid-November grew at a slower pace than in the previous period. The report also said US housing demand was quite depressed.

Analyst said The dollar is going to stay under pressure as long as markets continue to anticipate near-term Fed easing adding Markets have moved once again to fully price in a rate cut in December.

EurUsd edged up to 1.4839 +0.02% after trading lower for most of the session. It fell earlier to 1.4712, a one-week low. UsdJpy traded 1.05% higher at 109.96 after trading as high as 110.48, a one-week high. Gains in the Dollar versus the Yen were in line with a surge in the US stock market, which rose on the view that more Fed rate cuts are forthcoming. EurJpy rose 1.07% against the Yen to 163.17, while the high-yielding Australian dollar jumped 2.02% to 97.43 against Yen. UsdChf rose 0.5% to 1.1108, hitting earlier a one-week peak of 1.1195.

The Dollar had surrendered some of the session's earlier gains after government data showing New Orders for long-lasting US-made goods dropped for a third month in October, with companies appearing wary about making new investments.

Most analysts believe the Dollar could further decline given the weak tone in US economic data and the trickle of bad news from financial companies hit by the credit crunch. The Fed is widely expected to cut interest rates by 0.25 in December to 4.25% and again next year to stem economic fallout from the housing debacle.