Dollar Tumbles Against Euro

The stock market swoon and the faltering U.S. economy also are affecting the dollar, which slumped to 3 1/2-week lows against the euro currency and also fell against the yen Thursday.

Buoyed by its gains against the greenback, the euro also surged to three-month peaks against the yen and 2 1/2-month highs against the British pound.

“The euro’s looking great--it’s making a nice recovery, and the problems with [the U.S.] stock market are getting pretty severe, which is hurting the dollar,” said Scott Shultz, currency trader at Brown Bros. Harriman in New York. “There are worries that the [U.S. economic] landing is going to be a lot harder than expected,” he said.

The U.S. currency also tumbled to seven-week lows against the Swiss franc, erased recent gains against the Australian and Canadian currencies and softened against the yen.

On Thursday, the euro rallied to its highest level since Nov. 3 and ended at 87.22 U.S. cents, up 1.7% from Wednesday’s New York close. The euro also probed its highest levels since late August against the yen, ending up 1% at 96.26 yen.

If foreign investors assume the U.S. economy is weakening, they are less likely to want to invest in U.S. assets. That, in turn, would depress demand for dollars.