The US dollar edged lower against the euro and yen in afternoon trade in Asia on Friday as investors bet the Federal Reserve will lower interest rates next month. Speculation about further rate cuts in the US resurfaced this week after a slew of weak US economic data including housing construction that fell to the lowest level in 16 years. Bear Stearns added to the gloom with its first-ever quarterly loss. "There will be a Fed rate cut in January and another one in March and that's dollar negative," said David Mann, currency strategist at Standard Chartered Bank. The Fed has lowered interest rates by one percentage point since September, including a quarter-point cut this month. Also weighing on the dollar were hawkish comments made this week by European Central Bank President Jean-Claude Trichet. Trichet told the European Parliament that the ECB is "ready to counter upside risks to price stability." Inflation in the 13-member euro zone accelerated to 3.1 percent in November, the highest in more than six years and beyond the ECB's 2 percent target. His statement doused expectations that the ECB will follow the Fed and the central banks in UK and Canada in cutting interest rates to ease the global liquidity crunch and boost growth.