BERLIN -- The dollar hit record lows against the euro today, the second consecutive day with hopes all but dashed for an interest-rate cut in Europe.

The euro threatened to break $1.60 for the first time ever, trading at $1.5982 in late-morning European trading, above the record $1.5978 it fetched yesterday. The euro gave up some of those gains to trade later at $1.5956.

The dollar has been weighed down by a combination of gloomy U.S. economic data and high European inflation.

The British pound climbed to $1.9784 from $1.9708, and the dollar traded at 102.02 Japanese yen compared with 102.04 yen yesterday.

The euro gained strength yesterday from data showing that annual inflation in the 15-nation euro zone reached 3.6 percent in March, the highest level in 16 years.

That appeared likely to muffle calls for the European Central Bank to lower its interest rate from 4 percent. The bank's primary mission is to combat inflation.

More downbeat data on the U.S. housing sector yesterday underlined the economic worries that have prompted the U.S. Federal Reserve to slash its interest rates recently.

Lower interest rates can weigh on a nation's currency as traders transfer funds to countries where they can earn better returns, while higher rates are used to curb inflation.