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Traders ratcheted up their expectations that the US central bank would unleash a fresh rate cut at a looming two-day policy meeting scheduled for January 29-30.
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The federal funds short-term interest rate is presently pegged at 4.
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25 percent.
At 2200 GMT, the euro had surged to 1.
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4807 dollars, up strongly from 1.
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4660 dollars in New York late Wednesday. The euro's gain propelled it closer to its record high against the dollar of 1.
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4967 struck on November 23.
The dollar declined to 109.27 yen from 109.93 against the Japanese currency a day earlier.
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"Traders are now pricing in as much as 88 percent probability of a 50-basis-point rate cut to 3.
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75 percent, according to short-term fed funds futures," analysts at Forex Capital Markets said in a briefing note after Bernanke delivered a speech on the economic outlook.
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"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks," Bernanke said in Washington, adding tha