The euro fell against the U.S. dollar Thursday with increasing attention on whether the European Central Bank was considering a rate cut. The 12-nation currency bought US$1.2087 in morning European trading, down from US$1.2121 in New York the night before. The dollar was mixed against other major currencies, with the British pound falling to US$1.8203 from US$1.8221 and the dollar buying 108.75 Japanese yen, down from 108.80 the previous day. The euro turned downward after the Swedish Riksbank cut interest rates to 1.5 percent on Tuesday. Lower rates can boost economic growth by encouraging borrowing and investment, but can weaken currencies by reducing returns on fixed-income investments. Its drop has also come among pessimism about the European Union, following the French and Dutch rejections of the bloc's constitution and the failure of talks last week on a new budget. Following Sweden's decision, ECB President Jean-Claude Trichet noted that rates, at 2 percent, are at historically low levels. Nonetheless, the bank has shifted ground of late. After flatly ruling out the possibility of future rate cuts for most of 2005, ECB officials are now saying they are neutral. Though the euro has fallen to its current level from an all-time high of US$1.3667 at the end of December, it remains strong on continuing worries about the widening U.S. trade and budget deficits.