RTTNews - The dollar was pummeled by most majors on Tuesday, hurt by a weak US housing report and evidence that the euro zone economy may be shaping up.

A government report released Tuesday showed that new home construction plunged again in April, with the pace of building falling to a new record low.

While some declines might be expected as the housing market continues to work off excess inventories, the surprise fall undercut recent hopes that the bottom for the long-suffering home building industry was in sight.

Meanwhile, German investor confidence rose above expectations to its highest level in almost three years in May.

Also, European Central Bank Executive Board member Gertrude Tumpel-Gugerell said the bank had done everything possible with interest rates to boost the economy.

The dollar came under pressure versus the euro, sliding to a weekly low of 1.3677. The pair has been bouncing back and forth of late, with traders unsure about whether the euro zone will lag behind in any global economic recovery.

The dollar continued to take a beating versus the sterling, dropping to a 5-month low of 1.5523. With the loss, the dollar extended a long-term downtrend, and moved a full 20 cents from its 23-year high of 1.3501, set in January.

Annual inflation in the UK slowed more than expected in April to a level last seen in January 2008, according to official data released Tuesday.

The dollar fell sharply versus its Canadian counterpart, dropping to 1.1522. Against the aussie, the buck fell to a 7-month low of 0.7770. The buck barely budged against the yen, holding near 96.00.

The U.S. Commerce Department announced that housing starts dropped 12.8 percent in April to an annual rate of 458,000. The result for March was revised to a rate of 525,000 units, a decline of 8.5 percent from the previous month.

Wachovia released its global economic outlook Tuesday, predicting that business conditions in the US would remain challenging for the next few years, while economic contraction in many foreign markets is likely to slow.

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