The euro is trading at a new life-time high around $1.2431 in early London trading, as the dollar looks to end the year on a bad note, analysts said.
"It seems this bullish trend is going to continue in the near term," said Mr Paul Mackel, strategist at ABN Amro.
There is little in the way of fundamental news that appears to be driving trading at the moment, analysts noted, other than indications from some European officials that they are comfortable with the euro's rise. The US economic calendar remains thin today, with weekly jobless claims being the highlight.
The market also appears to be taking direction from remarks by ECB president Mr Jean-Claude Trichet that the ECB will pursue a strong euro.
Asked in a Wall Street Journalinterview whether he was concerned about the speed of the euro's appreciation, Mr Trichet responded that "I say I am rejoicing in that we are pursuing the same policy on both sides of the Atlantic," which he described as "aimed at delivering strong and stable currencies."
The euro has only been in existence since 1999, but an artificial euro/dollar exchange rate can be constructed using the old dollar/Deutsche mark values, and the Deutsche mark's euro-entry rate.
On this basis, the euro effectively set its all-time record against the dollar at $1.4540 in 1995.