Dollar Hits All-Time Low Vs. Euro

The dollar slid to an all-time low against the euro Tuesday amid expectations of higher interest rates outside the U.S.

One euro would purchase $1.3734 -- its highest level ever and up from $1.3622 late Monday.

The greenback also was reaching a 26-year low against the Sterling. One British pound was trading for $2.0265, compared with $2.015 previously. The dollar was weaker against the yen as well, buying 121.9 yen, compared with 123.4 yen previously.

The CurrencyShares Euro Trust(FXE Quote), which tracks the value of euros, and the CurrencyShares British Pound Sterling(FXB Quote), which follows Sterling, were gaining 0.7% and 0.4%, respectively, in recent action.

"Pretty much everyone is in agreement that the Federal Reserve is on hold and will not raise interest rates any time soon," says Jason Schenker, an economist at Wachovia. "That's in contrast to other central banks, where the talk is on when they are going to hike."

As a result, currency investors have expectations of sustained "interest rate differentials" between the dollar and the other major currencies, making nondollar investments more attractive, explains Schenker.

The weakness in the dollar gave precious-metals prices a boost. One ounce of gold was rising $1 to $663.50 an ounce, while silver was up 9 cents to $12.91 an ounce in recent New York futures market action. The price of dollar-denominated assets tends to rise as the value of the U.S. currency decreases.