The euro edged up to $1.3158 and 100.44 yen, from $1.3134 and 100.34 yen in New York.

Increasing uncertainty over the sovereign-debt situation in Europe prevented the euro from recovering most of Monday's losses, analysts said.

Then, the single unit plunged as EU leaders worked to reach a fresh treaty to tighten budgetary rules, aiming to give the go-ahead this week for Greece's second bailout deal.

"The euro's weaker trend will likely continue until an agreement on (Greek) debt reduction is in sight," Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ, told Dow Jones Newswires.

Credit Agricole said in a note to clients: "European fiscal concerns have been largely overlooked in the opening weeks of 2012, (but) such problems however may be about to resurface.

"As such, investor uncertainty may be about to return in force to undermine the euro and drive fresh safe haven demand for the US dollar," the bank said.

Meanwhile, the dollar's continued weakness, standing at 76.33 yen compared with 76.35 yen in New York, prompted Japan's finance minister to again suggest possible intervention.

European and global uncertainty has encouraged investors to buy the safer yen by dumping riskier currencies, such as the euro and the dollar.

"If there is excessive volatility or really speculative movement, I will be vigilant against it, and I will take decisive steps if necessary," Jun Azumi told a regular briefing.

He voiced hopes that Europe's debt crisis would ease, helping Japanese stock markets stabilise.