The dollar had its biggest weekly loss this year against the euro after Federal Reserve Chairman Ben S. Bernanke signaled he may cut interest rates further amid mounting concern that the economy is headed for a recession.

The U.S. currency fell yesterday to the lowest level in more than a week against the euro after reports showed U.S. consumer confidence tumbled this month and New York manufacturing contracted. The Swedish krona gained against 15 of the 16 most- active currencies this week after the central bank unexpectedly raised interest rates.

``The market is reacting to bad data from the U.S. and pessimism'' from policy makers, said Geoffrey Yu, a currency strategist in Zurich at UBS AG. ``The dollar will struggle.''

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The U.S. currency fell 1.2 percent this week to $1.4686 per euro, from $1.4504 on Feb. 8. It touched $1.4709 yesterday, the weakest level since Feb. 5. The euro gained 1.6 percent to 158.25 yen, from 155.71 a week earlier, its biggest gain since September.

The yen fell 0.5 percent this week to 107.82 per dollar. Japan's currency dropped this week as gains in stocks encouraged investors to buy higher-yielding assets funded by cheap loans in Japan. The Bank of Japan kept its main borrowing costs at 0.5 percent yesterday, the lowest among developed nations. The Standard & Poor's 500 Index rose 1.4 percent this week.

Bernanke's Testimony

The dollar fell about 0.5 percent against the euro on Feb. 14, the week's biggest decline, when Bernanke told the Senate Banking Committee the Fed ``will act in a timely manner as needed to support growth.'' The Reuters/University of Michigan index of consumer sentiment dropped to 69.6 in February, the lowest since 1992, from January's 78.4, the group said yesterday.

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