TOKYO, Sep 12 The dollar hovered near a record low against the euro on Wednesday as expec

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TOKYO, Sep 12 (Reuters) The dollar hovered near a record low against the euro on Wednesday as expectations of a Federal Reserve interest rate cut next week continued to erode the dollar's appeal.

The euro was supported by remarks by European Central Bank President Jean-Claude Trichet, who said on Tuesday that the ECB's monetary policy remained accommodative.

Investors took Trichet's remarks to mean the ECB could keep rates on hold for some time or possibly raise them again.

''Amid strengthening expectations for interest rates to be cut in the United States, interest rate differentials in the United States and the euro zone seem likely to narrow,'' said a trader for a Japanese trust bank.

''It looks like the euro will continue to be well-supported,'' the trader said.

The dollar has been under pressure after data last week showed U.S. payrolls shrank for the first time in four years in August, an outcome that investors took as increasing the chances for a 50 basis point Fed rate cut at a policy meeting on Sept.18.

The euro stood at $1.3837 as of 2350 GMT, little changed from late U.S. trading on Tuesday and holding near a record high of $1.3853 struck on electronic trading platform EBS in July.

The dollar's trade-weighted index against six major currencies stood at 79.678, hovering near a 15-year low of 79.603 hit on Tuesday.

The dollar slipped to 114.20 yen down slightly from around 114.30 yen in late New York.

Market players expect the Fed to cut the 5.25 percent benchmark federal funds target rate by at least a quarter percentage point next Tuesday.

Reuters TB VP0603

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