Sept. 24 (Bloomberg) -- The dollar fell against the euro as the U.S. Congress studies the government's $700 billion rescue proposal, with Federal Reserve Chairman Ben S. Bernanke saying a delay in passing the plan would hurt the economy.

The greenback also approached a one-month low versus the British pound before a report that economists forecast will show U.S. home sales dropped, bolstering the case for a Fed interest- rate cut. The Australian and New Zealand dollars weakened as prices for commodities the countries export declined.

``The dollar will face a lot of pressure to go lower,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``Uncertainty about when the U.S. rescue package will pass and how much of a burden it will place on future generations is damaging confidence in the dollar.''

The currency dropped to $1.4684 per euro at 12:38 p.m. in Tokyo from $1.4648 late yesterday in New York. It was at 105.66 yen from 105.56 yen. Against the pound, the dollar traded at $1.8544 from $1.8522. It reached a one-month low of $1.8642 on Sept. 22. The euro bought 155.16 yen from 154.63 yen. The dollar may decline to $1.4710 per euro today, Soma forecast.

The Australian dollar fell to 83.43 U.S. cents from 84.40 cents late in Asia yesterday. New Zealand's dollar weakened 1.4 percent to 68.06 U.S. cents.

Gold, Australia's third most-valuable raw material export, fell $3.80 to $887.40 an ounce. Crude oil, its fourth most- valuable export, was little changed at $107.07 a barrel after falling for the first time in a week. Raw materials account for 60 percent of Australia's exports and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments.

Illiquid Assets

U.S. lawmakers have balked at rubber-stamping the Treasury's plan to remove illiquid assets from the banking system, with Democrats demanding it include support for homeowners and limits on executive pay. Republicans are also resisting the plan, which economists predict would push the budget deficit to an all-time high next year.

Bernanke gives congressional testimony on the U.S. economy at 10 a.m. in Washington today. He and Treasury Secretary Henry Paulson said yesterday the bailout is needed to avert a recession in the world's biggest economy.

Gains in the euro may be limited by speculation weakening German business confidence will add to evidence that growth is slowing in the 15 countries that share the currency.

The Ifo institute's business climate index declined to 94.3 in September from 94.8 in August, according to the median of 41 forecasts in a Bloomberg News survey. That would be the weakest reading since June 2005. Ifo will release the report, based on a survey of 7,000 executives, at 10 a.m. in Munich today.

European Recession?

``The Ifo may be an ugly number, showing there are still concerns whether the euro zone will fall into a recession,'' said Lee Wai Tuck, a currency strategist at Forecast Pte Ltd. in Singapore. ``You will see some euro selling again.''

The euro may fall to $1.4580 and 154.00 yen today, he said.

The U.S. currency has lost about 5.5 percent versus the euro since touching a one-year high of $1.3882 on Sept. 11. The dollar reached $1.6038 on July 15, the weakest level since the European currency made its 1999 debut.

The U.S. National Association of Realtors will say today that house purchases declined to a 4.94 million annual pace from 5 million in July, according to a Bloomberg survey. The report is due at 10 a.m. New York time. Sales reached a 4.85 million pace in June, the fewest since comparable records began in 1999.

Home Sales Slide

The Commerce Department is forecast to report that sales of new houses dropped to an annual pace of 510,000 from 515,000 in July, according to a separate survey before tomorrow's data. Sales of existing and new homes are down 35 percent from their July 2005 peak.

``A large amount of wealth has truly been lost, and these are losses that have not been offset by gains,'' Robert Merton, the Nobel Prize-winning economist and co-founder of Long-Term Capital Management, said yesterday during a panel discussion at Harvard Business School in Boston. ``Like it or not, those losses have to be borne by house-owners, by those who financed them and by the general population.''

The chance of the Fed cutting its 2 percent benchmark rate by a quarter-percentage point at its Oct. 29 policy meeting was 58 percent yesterday, compared with zero a month ago, futures contracts on the Chicago Board of Trade showed.

Weaker Dollar

The U.S. Dollar Index traded on ICE futures in New York, which tracks the greenback against the currencies of six major trading partners, reached 75.890 on Sept. 22, the lowest since Aug. 13. It was at 76.618 from 76.468 yesterday.

``The housing market is still slowing and the poor state of the economy is likely to continue,'' said Michiyoshi Kato, a senior vice president of currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-largest bank by assets. ``Sentiment is bad toward the dollar,'' which may weaken to 105 yen today, he said.

The U.S. dollar may extend its decline to parity with the Canadian dollar, according to charts that predict price movements, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London. The greenback last traded at C$1.0347 from C$1.0384.

Daily and weekly momentum indicators such as the stochastic oscillator and Goldman's ``Trend Strength'' charts are both ``bearish,'' Edgeley wrote in a research note yesterday. ``There is scope for further extension toward the potential trend line support from February around C$1.0000.''

To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.netRon Harui in Singapore at rharui@bloomberg.net

Last Updated: September 24, 2008 00:09 EDT