* Euro touches session high, dollar falls vs. yen
* Fed chief says continues to expect ultra low rates
* Housing data underscores fragility in U.S. economy
(Updates prices, adds comment)
By Luciana Lopez
NEW YORK, Feb 24 (Reuters) - The U.S. dollar fell againstthe euro and yen on Wednesday after U.S. Federal Reserve chiefBen Bernanke reaffirmed expectations the bank will keep itsbenchmark interest rate exceptionally low for some time.
A surprise plunge in new U.S. home sales last monthbolstered investor outlooks for low rates, underscoring that arecovery in the world"s largest economy remains an ongoing --and sometimes bumpy -- process.
The euro rose as high as $1.3626 EUR= and last traded at$1.3600, up about 0.7 percent. The dollar fell 0.3 percent to89.96 yen JPY= as Bernanke"s comments subdued hopes U.S.interest rates would rise sooner rather than later -- a movethat would boost the value of dollar-based assets.
"The (Federal Open Market Committee) continues toanticipate that economic conditions -- including low rates ofresource utilization, subdued inflation trends, and stableinflation expectations -- are likely to warrant exceptionallylow levels of the federal funds rate for an extended period,"read Bernanke"s prepared testimony to the House FinancialServices Committee on Wednesday. For details see[ID:nN23238973]
The weak housing numbers showed consumers are stillstruggling, said Vassili Serebriakov, currency strategist withWells Fargo in New York.
"All combined, there are not a lot of reasons to buydollars today," he said. "The initial reaction has beennegative for the dollar but I wouldn"t be surprised if thatreverses because there are even fewer reasons to buy currenciessuch as the he euro and the pound."
Sales of newly built U.S. single-family homes unexpectedlyfell to a record low in January, dropping 11.2 percent.Analysts had expected the figure to gain over the previousmonth. [ID:nN24169849]
The single European currency was also propped up as sometraders further trimmed short positions following broadweakness in recent weeks.
The euro fell to a nine-month low of $1.3442 last week onconcerns about Greece"s public finances. A ratings downgrade ofGreece"s four largest banks by Fitch on Tuesday remindedinvestors of the financial woes facing the country.
Recent data showing German consumer sentiment set todecline in March also added to negative euro sentiment, as dida weak German business sentiment Tuesday. [ID:nBAF003980]
Elsewhere, sterling rose 0.2 percent to $1.5439 GBP=after having tumbled on Tuesday when the Bank of England leftthe door open to more emergency measures and issued a downbeateconomic outlook.
The dollar fell 0.3 percent against its Canadiancounterpart to C$1.0528 CAD= while the Australian dollar rose0.5 percent to $0.8939 AUD=.
(Additional reporting by Steven C. Johnson and VivianneRodrigues in New York and Naomi Tajitsu in London; Editing byAndrew Hay)
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