The euro sank to a record low against the US dollar yesterday as the euphoria that greeted the currency when it started trading last month appeared to be fading fast. Slowing growth across the 11-nation eurozone and impressive economic performance in the United States prompted Goldman Sachs and JP Morgan to revise sharply downwards their three and six-month forecasts for the euro. The euro dropped to US$1.1251, down more than 5 per cent from the peaks it first hit when it made its trading debut on January 4. Dealers said the euro was depressed by fears that monetary policy was set to be loosened when the European Central Bank ended its governing council meeting today. Evidence of slower growth across Europe was highlighted yesterday, when Britain - which is not part of the eurozone - slashed its interest rates by a higher than expected 50 basis points to 5.5 per cent. Both Goldman and JP Morgan said the euro would be stronger by the end of the year, but they cautioned that in the near term, it was likely to remain weak. Goldman currency economist Jim O'Neill said his earlier forecast that placed the euro at $1.24 in three months and at $1.26 in six months had been revised to $1.17 and $1.23. 'Further evidence of stronger than expected US domestic demand and weaker than expected European growth together with combined robust US capital markets could result in additional strength of the dollar,' Mr O'Neill wrote in a note to clients. JP Morgan said it was also reducing its forecasts for the euro. (Still, it said investor fears of financial contagion were diminishing as global economic prospects improved and risk aversion lessened.) The company said it expected the euro to trade at $1.14 at the end of next month, down from its earlier forecast of $1.22, and at $1.20, from $1.26, at the end of June. 'The resiliency of the US economy in the face of 15 months of global financial turmoil and slowing economic growth in much of the rest of the world has been impressive,' JP Morgan said in an outlook on exchange rates. 'Meanwhile, Europe's economy has proven less immune to the slowing global economy than many originally thought.' In the long term, JP Morgan said it was still bullish on the euro.