The euro hit record highs again Monday before modestly retreating on beliefs that the rally in the currency might be a bit overdone. Euros were recently trading for $1.4392, down from a record high of $1.4436 earlier in the session, but in line with the Friday close. "Overall, the trend remains higher for the euro in dollar terms," says Ron Simpson, managing director of currency analysis at Tampa, Fla.-based Action Economics. The market is widely expecting a quarter-point rate cut from the Federal Reserve this Wednesday, and another similar-sized reduction before year-end. That contrasts with the way traders view the European Central Bank, which seems more worried about squashing inflation than it is about economic growth slowing down. The effect in the foreign-exchange market is that yield-seeking investors choose to buy currencies with higher expected interest rates, such as the euro, rather than those where rates are predicted to be lower. Simpson notes that despite the relatively high nominal interest rates in the U.S., traders are still selling the dollar short and buying euros on expectations of further declines in the greenback's value. He has a near-term euro price target of between $1.45 and $1.47 over the next few weeks. Elsewhere in the foreign-exchange market, the British pound was selling for $2.0581, up from $2.053 late Friday. The dollar was selling for 114.81 Japanese yen, rising from 114.23 yen in the last session. Against the Australian dollar, the U.S. currency was buying AU$1.0857, down from AU$1.0891 previously. The CurrencyShares Euro Trust ( FXE) was up less than 0.1% in recent market action. The CurrencyShares British Pound Sterling Trust ( FXB) and the CurrencyShares Australian Dollar Trust ( FXA) were both ahead by 0.3%. The CurrencyShares Japanese Yen Trust ( FXY) was slipping 0.6%.