* Dollar falls vs euro, yen on Bernanke testimony
* Fed chief says continues to expect ultra low rates
* Housing data underscores fragility in U.S. economy
(Recasts, updates prices, adds comment, Bernanke remarks)
By Luciana Lopez
NEW YORK, Feb 24 (Reuters) - The dollar slid against theeuro and the yen on Wednesday after U.S. Federal Reserve chiefBen Bernanke reaffirmed expectations that the bank would keepits benchmark interest rate exceptionally low for some time.
A surprise plunge in January new home sales in the U.S.bolstered investor outlooks for low rates as well, underscoringthat a recovery in the world"s largest economy remains anongoing -- and sometimes bumpy -- process.
The euro firmed 0.37 percent to $1.3555 EUR=, as thedollar fell 0.42 percent to 89.820 yen JPY=.
"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 (housing) data is obviously very weak, and I don"tthink Bernanke said anything new," said Marc Chandler, seniorcurrency strategist at Brown Brothers Harriman. "It"s just thatthe economy has recovered but still needs low rates."
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 hovered near a nine-month low hit versus thedollar last week, after data showed German consumer sentimentwas set to decline into March, following weak businesssentiment data on Tuesday. [ID:nBAF003980]
Concerns about Greece"s public finances remained in thebackground. A ratings downgrade of Greece"s four largest banksby Fitch on Tuesday reminded investors of the financial woesfacing the country. (Additional reporting by Steven C. Johnson and Naomi Tajitsu;Editing by Padraic Cassidy)
Currencies
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