The euro hit a new record high above $1.53 on Thursday after data showing weakness in the U.S. services sector and poor private employment figures.
Worried European leaders called on U.S. authorities to do more to halt the dollar's slide.
The European Central Bank and the Bank of England held interest rates unchanged, as they struggle to fight rising inflation caused by increasing food and energy prices.
Treasury Secretary Henry Paulson repeated his mantra that the fundamentals of the U.S economy are strong and that they will be reflected in the currency. And this time, analysts say, he may have a point.
"At the moment, everything looks so bad for the U.S. and so good for Europe, that we think the level is very good for buying dollars," Felix Adam, from ACT Currency Partners in Zurich, told CNBC.com.
"Personally, I think all the negative fundamentals are priced in. Even the 75-basis-points rate cut by the U.S. is priced in. We need to have more aggressive news to move it," Adam added.
The moment for the reversal is hard to predict, but it could be triggered by verbal intervention from European central banks.
"Surely, companies in Europe are not happy any more with the strong currency," Adam said.
From a technical analysis perspective, a bounce-back rally which had been anticipated before the dollar reached its new low against the single European currency has been delayed, and a comfortable level is considered to be around $1.54, Tom Hobson, technical analyst at Merrill Lynch, told "Power Lunch Europe".
Nevertheless, this level could be blown away if the greenback's credibility takes another hit.
"Are we in a dollar crisis? If we're in a dollar crisis, you're going to see the market move up above $1.60," Hobson said.
The U.S. currency's supremacy has been hit by a looming recession, a yawning current account gap and the fallout of the subprime crisis. But these are not likely to affect it in the long term, some analysts say.