The dollar fell to the latest in a series of record lows against the euro as a heightened security alert in the US generated further negative sentiment towards the currency.
Trading in the currency markets was relatively thin ahead of the holiday period, although analysts believe the dollar will slide even further in the short term.
Yesterday the dollar ended at $1.24 against the euro with experts suggesting it could fall as low as $1.30-$1.35.
Mr Niall Dunne, Ulster Bank's financial markets economist, sees few short-term signals that the dollar could improve.
"Investors have no appetite for the dollar at the moment. They are steering clear and will only come back to buy the dollar when it looks cheap, which could be at between $1.30 and $1.35," Mr Dunne said.
The US government raised its terror alert to "orange", the second-highest level, at the weekend, warning that there was a high risk in the holiday period of an attack that could be even bigger than the events of September 11th, 2001.
"The terror alert is definitely a focus" for the dollar and was weighing on the US currency, according to Mr Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston.
Currency moves may be exaggerated because "holiday markets will keep trade thin today and tomorrow", he added.
Analysts said fundamental economic factors would have little impact on currencies and said price action would be dictated more by rumours and speculation in the market.
"Rumours and news-related events are going to move the markets more than economic fundamentals at this point because of low liquidity," said Ms Lauren Germain, currency strategist at Banc of America Securities in New York.
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