The U.S. dollar fell to a record low against the euro this morning after Treasury Secretary Henry Paulson said volatility in the financial markets will take time to resolve and traders speculate that the Federal Reserve will cut interest rates at its Sept. 18 meeting, CNN Money reported.

The euro hit $1.3920 against the dollar in morning European trading, after a record $1.3914 on Wednesday. The British pound fell to $2.0256 against the dollar from $2.0302 on Thursday, while the dollar rose to 114.47 against the yen from 114.26.

Lower interest rates, used to boost an economy, could weaken the dollar further by giving investors lower returns on investments denominated in the currency. Meanwhile, many economists expect the European Central Bank to increase interest rates by the end of the year.

In related news, the Labor Department reported today that the number of workers filing for unemployment benefits for the first time rose by 4,000 last week to 319,000, a sign the economy is feeling the impact of a housing slump and credit crisis. This is the sixth increase over the past seven weeks. Last week, the government reported that employers cut 4,000 jobs in August, the first monthly decline in four years.