The dollar fell to a 20-month low against the euro on Monday on continued concern that the euro zone interest rate outlook is more favourable than that in the United States.
The US currency pared some of its losses after French Finance Minister Thierry Breton said at a meeting of European finance ministers in Brussels that it was important for the euro zone to be "highly vigilant" following the dollar's recent decline. The meeting ends on Tuesday.
"I expect to hear more comments from European officials trying to put some brakes on a rapid appreciation on the euro until the end of this meeting," said Greg Salvaggio, vice president of trading at Tempus Consulting in Washington. "But chances are that the dollar slide will continue because we all know rates are going up in Europe."
In late afternoon trading in New York, the euro was up 0.3 percent on the day at $1.3131, after having earlier spiked up to a 20-month high of $1.3172, according to Reuters data.
EBS, another source for currency prices, pegged the session high at $1.3180. The euro has now risen nearly 11 percent on the year, having gained around 2 percent since last Wednesday. The euro rallied above the psychologically important $1.30 level on Friday in thin volume with analysts citing positive sentiment about the euro zone's interest rate outlook compared with that of the United States and renewed concerns about diversification of reserves away from the dollar.
The euro also rose to a record peak against the low-yielding yen on Monday. Against the yen, the euro was up 0.5 percent at 152.44 yen after hitting a record peak of 152.49, according to EBS data.
The dollar was up against the yen in volatile trade, gaining 0.2 percent to 116.08, after bouncing from a three-month low of 115.37 yen, according to Reuters data. Sterling last traded at $1.9373, taking its gains since the start of this year to more than 12.5 percent. It earlier hit a two-year peak of $1.9465 before slipping back.
With little else to focus on ahead of a slew of US economic data later this week, investors have zeroed in on comments about the euro's dramatic rise against the dollar. Eurogroup Chairman Jean-Claude Juncker said on Monday he was not concerned by the current level of the euro and that a critical point was "lengths away."
Investors are also gearing for US economic data scheduled for release later in the week, analysts said. In other news, Sergei Kamburov, a deputy director of the Russian central bank's market operations, told a Euromoney conference on Monday that the euro was the most important competitor to the dollar, but that he did not see it overtaking the greenback.