Oct. 26 (Bloomberg) -- The dollar fell to a record low against the euro on signs climbing oil prices and a slump in housing are hurting U.S. consumer confidence, bolstering the case for the Federal Reserve to cut interest rates again.

The U.S. currency headed for a third straight weekly decline versus the euro on rising speculation the housing slump will erode corporate earnings. Countrywide Financial Corp., the biggest U.S. mortgage lender, reported its first quarterly loss in 25 years as borrowers defaulted on loans.

``The dollar-negative momentum continues to build up,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``We had a string of pretty ugly numbers, both from the real economy side and the financial side. That is weighing on the dollar.''

The dollar weakened to $1.4381 per euro at 10:32 a.m. in New York, from $1.4324 late yesterday, after touching an all- time low of $1.4388. It has declined against 14 of the 16 major currencies this week, falling almost 5 percent against South Africa's rand. Ruskin said the dollar may reach $1.50 per euro in March.

The dollar has dropped against the 16 most-actively traded currencies this year. Its 9 percent decline against the euro in 2007 leaves it in line for the biggest loss since 2003. The U.S. Dollar Index, measuring its performance against its six major peers, has lost 8 percent in 2007 and set a record low of 77.008 today.

``One-way Street''

``The market is in a one-way street against the dollar,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``Further dollar weakness is pretty much a certainty.''

Osborne said the dollar may push past $1.44 per euro today, triggering pre-set orders to sell the U.S. currency. The euro may advance to $1.456 before the Fed meets on Oct. 31, he said.

The dollar will rebound to $1.40 by June, according to the median forecast of 47 analysts and brokerages in a Bloomberg survey.

The dollar's decline has driven politicians including French President Nicolas Sarkozy to say exports from the $10 trillion euro-region economy may suffer as the euro gains. At the same time, the cheaper dollar has buoyed U.S. exports. The nation's trade deficit in August dropped to $57.6 billion, the narrowest since January, the Commerce Department said Oct. 11.

The weaker dollar helped push Philip Morris International's operating profit up 19 percent to $2.5 billion in the third quarter, according to New York-based Altria Group Inc., the parent company. Sales at Egide SA's American unit fell 12 percent last quarter partly because of the dollar's drop, the French maker of ceramic packages said.

Dollar Spurs Oil

The U.S. currency was at 114.28 yen today, from 114.18 yen yesterday. The dollar fell as low as 91.49 cents per Australian dollar, the weakest since 1984.

Finance ministers and central bankers from the Group of Seven major industrialized nations last week refrained from mentioning the euro in their official statement after meeting in Washington and called for faster appreciation of China's currency. The yuan headed for its biggest weekly advance in a month and was at 7.4877 per dollar.

A recovery in European stocks this week also sparked a return to carry trades, where investors buy assets in countries with high yields with loans in low-yielding currencies such as the yen. Stock indexes in Germany and the U.K., Europe's two biggest economies, headed for weekly gains.

Oil rose above $92 a barrel for the first time in New York after the U.S. accused Iran's military of supporting terrorism and stepped up pressure on foreign companies to cut ties with the Middle East oil producer. The dollar's slide has helped spur oil gains, according to Michael Davies, an analyst at Sucden (U.K.) Ltd. in London. A lower dollar makes oil cheaper for customers who buy it with other currencies.

Consumer Confidence

A Reuters/University of Michigan index of consumer sentiment showed confidence was the weakest this month since May 2006. The measure was 80.9 in October, falling from 83.4 in September.

Interest-rate futures traded on the Chicago Board of Trade show a 94 percent chance the Fed will lower its rate a quarter- percentage point to 4.50 percent this month, after a half-point cut on Sept. 18. Traders see a 6 percent chance of a half-point cut.

The European Central bank kept its benchmark rate at 4 percent on Oct. 4 and interest-futures show traders bet the bank will increase rates to 4.25 percent by December. Japan's key rate is 0.5 percent.

``It could well be that we get a half a point off the Fed funds rate next week, a quarter-point in December and then we pause for breath,'' said Paul Chertkow, head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in London. ``The dollar is going to weaken.''

The worst housing slump in 16 years has deepened as the riskiest borrowers default on home loans at a record pace, causing losses at Wall Street firms.

The yen traded as low as 164.53 against the euro, the weakest since Oct. 19, from 163.54 yesterday.

To contact the reporters on this story: Bo Nielsen in New York at bnielsen4@bloomberg.net ; Ye Xie in New York at yxie6@bloomberg.net .