FOREX-Gloomy US economic outlook hurts dollar versus yen

(Recasts, updates prices)

By Lucia Mutikani

NEW YORK, March 4 (Reuters) - The dollar fell versus the yen and Swiss franc on Tuesday after Federal Reserve Chairman Ben Bernanke gave a grim assessment of the U.S. housing sector, adding to mounting fears of a recession in the United States.

Verbal intervention by euro finance ministers ahead of the European Central Bank meeting on Thursday halted the euro's five-day run of record highs versus the dollar.

However, the euro maintained its upward bias against the dollar, with investors convinced that the poor U.S. economic outlook will keep the Fed on its easing path.

"Everytime Bernanke and Treasury Secretary (Henry) Paulson speak, the dollar weakens immediately. The problem in our view is that the U.S. representatives are so downbeat on the U.S. economy," said Mark Meadows, currency strategist at Tempus Consulting in Washington.

Bernanke warned that mortgage delinquencies and foreclosers were likely to rise and home prices were likely to fall and he called for active measures to stabilize the housing market. For details, see [ID:nN04237897].

The dollar dipped to a session low of 102.66 yen <JPY=>, within striking distance of a three-year trough of 102.62 yen touched on Monday, according to Reuters data. It was last trading at 102.70 yen, down 0.5 percent on the day.

Analysts reckon the dollar could fall to as low as 100 yen, a level last breached in late 1995. The yen also rose as equities markets fell, which prompted investors to unwind trades that were funded by borrowing in the low-yielding Japanese currency.