The euro hit 10-month lows against the US dollar today as investors doubted a solution for Greece's fiscal woes was on the cards, with the cautious mood holding Asian stocks below two-month highs.
Concerns around Greece's fiscal problems returned despite Germany saying overnight for the first time it may support a euro-zone financial aid package for Athens.
Some analysts said Germany's support, which was pegged to tough terms including help from the International Monetary Fund, made it unlikely European Union leaders would agree on a deal for Athens at a two-day summit starting tomorrow.
"Be it the EU or the IMF, how either of them would rescue Greece remains uncertain. The euro looks set to trade defensively in the near term," said Masafumi Yamamoto, chief currency strategist at Barclays Capital in Tokyo.
Anxiety over Greece could overshadow a raft of US and European news out today, including Germany's flash PMI, US durable goods orders, and a pre-election UK budget.
The euro fell as far as to $1.3403 on trading platform EBS, its lowest since May 2009. It has fallen 6.3 per cent so far this year, its worse performance since 2005 when it shed 12.7 per cent.
Against the Swiss franc, the euro hit a record low of 1.4232 francs on EBS, fuelling talk among traders the Swiss National Bank may intervene in the market again to weaken its currency.
Against the Australian dollar, the euro slid to an all-time low of A$1.4621.
A firmer US dollar dampened commodity prices, with oil down 68 cents at $81.23 a barrel. Gold erased earlier gains to be flat around $1,100.95.
A falling euro also boosted the yen and weighed on Japanese exporters. The benchmark Nikkei closed up 0.4 per cent, paring a 1 per cent rise earlier in the day.
Reuters