The euro last traded at $1.3058, down 0.02 percent on the day. During early London trade, the euro touched $1.3017, its weakest since Jan. 7.
"For the euro, the focus is on the 2013 lows below $1.30, and events in Italy show that politicians are pushing back at fiscal austerity measures," said Paul Robson, currency strategist at RBS. "It is negative for the euro, and until it remains below $1.3170, it will remain a sell on rallies."
Against the yen, the euro reversed its course as well, finishing the day in the 120.20 yen area, up 0.27 percent. It had been trading near Monday's one-month low of 118.86 yen when it posted its single biggest percentage loss since early May 2011.
Despite its spurt higher in afternoon New York trade, the euro has been steadily losing ground. It is off a 15-month high against the dollar and a near three-year high against the yen. That is a swift turnaround from the start of 2013, when the euro rallied on hopes the worst of the euro zone debt crisis was over.
Bernanke Defends Policy
Bernanke strongly defended the U.S. central bank's bond-buying stimulus, saying its benefits clearly exceed possible costs.
He also urged lawmakers to avoid the sharp spending cuts set to take effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.
The dollar last traded at 91.89 yen, up 0.10 percent on the day and not far from 90.92 yen on Monday, its lowest in nearly a month.
The focus on Italy temporarily took a backseat to U.S. economic data.
U.S. home prices closed out 2012 with the biggest annual gain in more than six years, according to the S&P/Case Shiller index, while government data showed sales of new homes spiked in January, the latest sign that the long-suffering housing market was on the mend.
Consumer confidence rose more than expected this month as Americans shrugged off worries about fiscal policy.