The dollar was trading at new seven and a half month lows against the euro as the currency continued to suffer the effects of Federal Reserve chairman Ben Bernanke's suggestion that US interest rates are close to peaking. Bernanke told a congressional committee last night that Fed policymakers may decide to pause in hiking interest rates, reigniting speculation that the expected hike next month to 5.0 pct could be the last. A further negative for the dollar came when Bernanke expressed concern over the US' record high current account deficit. Tackling the widening shortfall presents a challenge, he said, adding that it could lead to "disruptive changes" in the dollar and other asset prices. "The prospects for the dollar are clearly negative following the speech, especially given the emphasis on the current account," said Mitul Kotecha at CALYON. Bernanke's comments merely added to the spate of dollar-negative factors this week - including the G7 communique calling for greater currency flexibility in Asian currencies, central bank reserve.diversification away from the dollar and China's rate hike yesterday. Against the yen, however, the dollar recovered some of its losses yesterday, which had seen it plummet to three-month lows against the Japanese unit, following efforts from various quarters to clarify that the G7 statement was not an attempt to call for dollar weakness. Comments by Bank of Japan governor Toshihiko Fukui earlier today also tempered the yen's gains. Speaking after the BoJ's decision to leave its zero pct rate policy intact, Fukui said the central bank is in no hurry to raise interest rates. Judging the right time to raise rates will be difficult, but the BoJ will bide its time, Fukui said. "We see difficult times ahead but we're not in a great hurry, at the same time we're not too relaxed." For this morning, attention will focus on euro zone inflation data for April, where analysts are expecting annual CPI to have risen to 2.3 pct from 2.2 pct in March, strengthening the European Central Bank's case for hiking rates further.