The euro slid below 93 US cents today after the latest economic snapshot from euro-zone powerhouse Germany showed that the business climate in the west of the country was still cooling.
The single European currency slid as low as 0.9291 - its lowest point since last Wednesday - before regaining some ground. It stood at 0.9363 earlier in Asia, before the German data came out.
The euro also bought 108.27 yen from 109.39 in New York late on Friday. The dollar meanwhile bought 116.40 Japanese yen, from 117.15 in New York.
The euro has staged a remarkable comeback against the dollar in recent weeks, because market players are starting to view the euro-zone as a safer bet compared with the sharply slowing US economy.
But the German data appeared to confound that view. The Munich-based Ifo economics research institute reported that the business climate index for western Germany fell for the seventh month in a row in December to 96.5 - its lowest level for more than a year.
"The market was pricing in a small decline but I think it was a little bit worse than expected," said Mike Moran, an economist at Standard Chartered.
"The market reacted to that and started thinking about what this means for growth and what this means for the European Central Bank as well," he added. "How much longer can the ECB wait before they start thinking about cutting interest rates?"
The differential between euro-zone and US interest rates has narrowed sharply, but a new cycle of rate cuts from the ECB would make returns on euro-denominated assets less attractive, and hence quell demand for euros.
French Finance Minister Laurent Fabius said that the euro was set for a period of stability.
The single currency "has already risen, things will progress, then there will be a stabilisation," he said on the fringes of a meeting in Orleans, south of Paris.
"What is important is that the euro should be stable, at a level which positions us well (in relation to the dollar)," he said.
"From the moment that Europe has a higher growth rate than the United States, a weaker inflation rate and weaker interest rates, a balance will be struck," he said.
The yen meanwhile found support from the better showing on the Tokyo stock market, where the Nikkei index hauled itself back above the 14,000-point level for the first time in almost one month.
AFP