The euro sank to this year's low against the dollar and the yen today as a deteriorating chart outlook encouraged traders to extend hefty overnight losses.
The single currency shed more than two yen in the previous session, staging its biggest one-day fall since May. The euro's slide against the yen also knocked it back against the dollar as momentum traders got in on the act when chart support at $0.8870 crumbled.
"The euro just fell of a cliff late yesterday, and there was talk some guys were trying to take out options positions," said Mr Paul Mackel, currency strategist at Dresdner Kleinwort Wassertein.
Technically, the euro is now in a difficult position and may have further downside momentum in the near term.
A lot will depend on US equity markets. A disappointing earnings outlook from US semiconductor giant Intel after the closing bell pushed European stock markets down at the open, while Nasdaq futures nursed hefty losses.
Talk that troubled US discount retailer Kmart could be headed for bankruptcy was also seen capping the dollar's gains in the near term.
The single currency was also down a third of a per cent against the Swiss franc, fuelling talk that some of the selling could be related to the ongoing crisis in Argentina.
Argentina's central bank intervened in the floating peso market overnight to prop up the currency when it weakened to near 2.0 pesos/dollar.
Dealers said US consumer price and industrial production data, due later in the day, would also be closely watched.