The dollar remains under pressure against all major currencies on fears that the Federal Reserve may need to slash interest rates further to stop the downward spiral in the credit markets.

The greenback was at 100.57 against the yen after breaking below 100 yesterday in a day of wild trading, that set off alarm bells at Japan's Keidanren industry lobby.

It touched a record low of $1.5651 against the euro and came within a whisker of parity with the Swiss franc for the first time in history.

It rebounded somewhat in London today and was trading at $1.5582 by mid morning.

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However, Mitul Kotecha, head of currency strategy at Credit Agricole, said: "The real risk remains that we get a dollar rout. The news from from the US is consistently negative and investors are actually not overly long euros."

The dramatic slide in the US currency prompted strategists at Goldman Sachs and Morgan Stanley today to go on 'intervention watch' on expectations the world's central banks may consider stepping into to halt the decline.

Yesterday's plunge came amid an investor flight into commodities, seen as a way of insulating wealth from the dollar's decline. In the US, crude oil reached a record $111 a barrel despite rising inventories.

A shock fall of 0.6pc in February retail sales cemented fears that the US is sliding into a fully fledged recession. The markets are now pricing in a three-quarter point cut in rates to 2.25pc next week.

The European Central Bank has so far refused to blink, holding rates at 4pc since the credit crunch began. The result is a yawning transatlantic yield gap, drawing huge sums of hot money into Europe.

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