"The magnitude of the reaction in the euro/dollar suggests that investors have been caught wrong footed as they had expected the ECB to be less dovish and the [Federal Reserve] more so," said Kathy Lien, managing director at BK Asset Management.
On Thursday ECB governor Nowotny told CNBC the bank would provide more liquidity to avoid a "cliff" effect once the bank's cheap loans to euro zone banks come to an end.
(Read more: Euro zone suffers from integration fatigue)
Lien said expectations for a more dovish tone from the ECB would continue to push the currency lower in the near term.
"The mere prospect of easier monetary policy from the ECB could still drive the euro/dollar lower. With support at $1.36 broken, the next level to watch in the euro/dollar will be $1.3475," she added.
While there will likely be much speculation over whether the ECB will take action at next week's meeting, Westpac's Callow said he doubted the bank would react quickly to the inflation data, noting a December rate cut was more likely.
(Read more: Euro zone moving from economic to political crisis)
However, according to Mitul Kotecha, head of global markets research for Asia at Credit Agricole, the euro's plunge was not reflective of any changes to Europe's growth outlook.
"Risks to the euro have been building for some time... The bottom line is that it was primed for a fall," he said.
"It's more of a case that the euro has built in too much good news, and on top of that it's been benefiting from a weaker dollar and the delay of tapering...I don't think there's been a change in the perception of Europe's growth story. Data has generally been positive, aside from a few disappointments," he added.
Kotecha pointed out that a weaker euro will in fact benefit Europe's growth outlook because it will make its exports more competitive.
—By CNBC's Katie Holliday: Follow her on Twitter