The euro fell to a one-month low against the dollar today on concerns about the health of the euro zone economy after Moody's said it may cut Ireland's sovereign debt ratings.
Moody's said Ireland's prized 'AAA' rating may be cut to mid-to-high Aa range if it concludes that the country will emerge from the crisis with "relatively weak growth prospects and a much higher debt burden".
Ireland has already lost its top-notch rating status from the other two major ratings agencies, S&P and Fitch. Moody's said its decision reflects the "severe economic adjustment" taking place in Ireland.
Traders in London said the news gave the euro an extra push lower.
The single currency had already been reeling from earlier comments from European Central Bank President Jean-Claude Trichet and as the market anticipated that the central bank will announce unconventional measures at its May meeting.
"It was already the case that the market was turning more euro-sceptic," Brussels-based KBC analyst Peter Wuyts said.
"On a day-to-day basis, uncertainty over what will be decided at the ECB meeting is the dominant trading theme," he said.
At 11.51am, the euro fell 0.8 per cent to $1.3076, just above a one-month low of $1.3057 hit shortly after the Moody's announcement.
Against the Japanese yen the single currency also dropped back below the 130 yen mark to trade down 0.8 percent on the day at 129.94 yen.
The dollar gained broadly meanwhile, jumping by 0.7 perc ent on a trade-weighted basis to 85.800. The US currency was steady against the yen at 99.34 yen.
Markets were jittery, however, as they awaited key earnings results from Citigroup later in the session.