The dollar rose against the euro to a new 10-month high Friday in Asia as speculation grew that the European Central Bank may lower interest rates. The U.S. dollar was trading at 108.97 yen midafternoon in Tokyo, up 0.22 yen from late Thursday and above the 108.89 yen it bought in New York later that day. The euro fell to US$1.2030 from US$1.2086 late Thursday and to 131.10 yen from 131.37 The euro temporarily fell below US$1.20 to touch a new 10-month low against the dollar as speculation mounted that the European Central Bank will lower interest rates to stimulate regional economies. Traders say sentiments are pessimistic about the euro as doubts remain about European economies. Lower interest rates tend to drive the currency lower because it becomes less attractive to investors. "We succeeded in getting below $1.20, but I think the market will want to test the downside again," said Yukihiro Shimoyamada, vice president of foreign exchange dealing at UFJ Bank. The dollar also got a boost from expectations for higher U.S. interest rates. Many economists predict the U.S. Federal Reserve will raise its benchmark interest rate by 0.25 percentage points to 3.25 percent. The Fed is holding a two-day policy meeting starting June 29. But speculation about a revaluation of the Chinese currency is one factor that's pushing the dollar down although the market focus on that issue may be starting to fade, traders say.