The euro slipped a quarter per cent against the dollar and the yen today as frustration at its inability to sustain recent gains encouraged profit taking.
A report that German Chancellor Mr Gerhard Schroeder had lowered the official German growth forecast for this year also weighed on the single currency.
Germany's Sternmagazine cited Mr Schroeder as revising this year's growth forecast to a 1.5 to 2.0 per cent range, from a previous target of around two per cent. Mr Schroeder was also quoted as suggesting he would not reach his goals on unemployment by elections next year.
The euro fell to day's lows around $0.8750 in early European trading, coming within a whisker of yesterday's low, and down more than a cent from 2 1/2 month highs scaled last Friday.
Dealers said the single currency was looking particularly vulnerable against the yen, with the market disappointed by its recent failure to hold above the psychological 110 yen level.
The euro's retreat was in part blamed on soft euro-zone economic data, though traders noted recent German unemployment and industrial output were actually not as weak as expected.
Still, euro bulls were troubled by European Central Bank chief economist Mr Otmar Issing, who reiterated that present interest rates were appropriate.
Dealers took the comment to imply that the bank might not cut rates at its next meeting on August 30th as many in the market have long hoped.