TOKYO, Japan -- The euro and the pound fell against the dollar in Asia Tuesday on expectations of lower interest rates in Europe to stave off the threat of recession, dealers said.

The yen was little moved by Japanese Prime Minister Yasuo Fukuda's abrupt resignation, which analysts said was unlikely to bring a major policy shift given the current political deadlock in Asia's largest economy.

The dollar was at 108.19 yen in Tokyo midday trade, against 108.18 in London on Monday, when US markets were closed for the Labor Day holiday. The euro slipped to $1.4582 from $1.4606 and to 157.76 yen after 157.99.

The greenback could post further gains against other major currencies as central banks outside of the United States are expected to acknowledge the worsening economy, Chuo Mitsui Trust Bank strategist Yosuke Hosokawa said.

"Markets are focused on the weakness of economies other than the US. There is a widespread view that currencies will further weaken against the dollar," he said.

The Bank of England and the European Central Bank are both expected to leave their key lending rates on hold on Thursday, but there is speculation they will be forced to cut rates before long due to the weak economy.

The Australian central bank was expected to cut its benchmark rate later Tuesday for the first time since 2002.

Traders are also bracing for the Federal Reserve's Beige Book economic report due on Wednesday, followed by key US jobs data on Friday.

The pound dipped below $1.79 for the first time in more than two years on growing worries about the health of the British economy, while the euro touched a fresh record high of 81.52 pence.

The European Union's decision to freeze talks on closer ties with Russia over its military action in Georgia was also weighing on European currencies, dealers said.

Markets were little affected by the sudden resignation of Japan's unpopular prime minister.

"In today's markets, Japan is no longer a central theme. With low interest rates and weak economic conditions, this type of news does not shake markets," said Hosokawa.