LONDON (AFX) - The euro continued lower against the dollar on the recovery of US stocks and on pessimism over the outlook for the euro zone economy, dealers said. Dealers said that after falling below 0.89 usd last night, the euro is expected to test new lows in the near term as investors take a cautiously upbeat view of US economic prospects. "US stocks are helping the dollar, but the dollar is also trading higher on market expectations that the US will come out of the downturn before other countries," Bear Stearns economist David Brown said. "The euro also seems to be breaking down now and seems set for a test of 0.87 usd fairly soon, with an ultimate objective of 0.85 usd on the horizon before longer term euro recovery sets in," he said. Halifax economist Nick Mirtchev said there will be no economic data out today to hold the dollar in check. "I wouldn't expect the euro to go too far down today but I wouldn't be surprised if it doesn't go more decisively below 0.89 usd today," he said. Dealers said investors are hoping the European Central Bank will cut rates at Thursday's meeting of its governing council. "There will probably be a bit of disappointment if it doesn't, although the market overplays the immediate effect of ECB monetary policy," Mirtchev said. "I suspect that whatever the ECB does, the euro is going to suffer, given the current negative sentiment," he said.