LONDON (AFX) - The dollar slipped lower in midday trade reaching a 16-month month low against the euro as negative dollar sentiment gripped the market after heavy US stock market losses overnight, dealers said. "The dollar's trading at fresh lows against the euro and the swiss franc," Will Rugg, currency strategist at Standard & Poor's MMS, said. Positive euro zone data compounded the dollar's downward slide to a low last seen in February 2001, Rugg said. Strong French consumer confidence data and an increase in the euro zone business confidence data, along with a downward revision to euro zone unemployment, added to the dollar's woes. Christoph Rieger at Commerzbank said this morning's data could lead to a raft of upgrades of expectations regarding the pace of the euro zone recovery, further underpinning the euro's increasingly rosy prospects in comparison to the dollar. The euro may push even higher against the dollar later, if US equities slide further on the open. Euro-dollar is now approaching the last January's high of 0.9594, Rugg said, noting that further US equity losses this afternoon could be the catalyst to break through that level. There is evidence of further dollar selling in early New York trade, he noted. A currency trader said market players are expecting the dollar to slide further in the New York session. Meanwhile the yen remained steady above the 123 level against the dollar. Rugg said he would expect further intervention from the Japanese authorities if it dropped below 123. "They want to keep a floor beneath it... to slow down the trend," he said. There has been speculation that the Japanese authorities would act today, taking advantage of the thin liquidity given the holiday in the UK to mark Queen Elizabeth's 50 years reign. "There's been speculation that they'll hit the market today with thin liquidity," he said, but noted that it would be an unprecedented move and the gap would soon be corrected when trade returned to normal levels following the holiday. The Australian dollar continued higher on expectations of a Reserve Board of Australia interest rate hike tomorrow.