Frankfurt - The euro hit a three-year low Friday of below 1.26 dollars amid forecasts that a slumping European economy will force the European Central Bank (ECB) to cut interest rates again.

Earlier this year the common currency hit a record high of more than 1.60 dollars.

However, economists now believe that the ECB will deliver another hefty cut in borrowing costs by the end of the year as economic growth and inflation slow. (dpa)