The euro touched a six-week low on Monday after suffering its biggest drop in over a year last week as pressure mounted on the European Central Bank to cut interest rates to shore up growth.
The skidded below chart support around $1.3460/80 and fell to as low as $1.3442 on trading platform EBS, its lowest level since Sept. 18. It later trimmed its losses and was last down 0.1 percent on the day at $1.3478.
(Read more: Were the euro bulls just too hasty?)
Market players said there was no clear trigger for the euro's latest drop, adding that meager trade and stop-loss selling may have dragged the common currency lower.
"Just thin Asia liquidity with Japan on holiday. I wouldn't read too much into it," said Gareth Berry, G10 FX strategist for UBS in Singapore.
The timing of the euro's drop seemed to roughly coincide with comments from Federal Reserve Bank of Dallas President Richard Fisher, but some market players were skeptical that his remarks had much of an impact.
"I think there may have been some stops," said a trader for a Japanese bank in Singapore, referring to stop-loss selling in the euro.
Speaking at a conference of business economists in Sydney, Fisher said he was concerned that corporate credit spreads have narrowed too much, and added that he does not see the Fed's balance sheet rising to $6 trillion or more.
(Read more: Why the euro area remains a good investment bet)
The euro remained on the defensive ahead of the ECB's policy meeting on Thursday.
After data last week showed a plunge in euro area inflation, a growing number of commentators, including UBS and RBS analysts, reckons a rate cut could come as soon as Thursday's policy meeting.
"Although market expectations for ECB action have grown due to the weak inflation print, we think a December move is much more likely," analysts at Barclays Capital wrote in a note, adding an that if the ECB left its policy rate unchanged on Thursday there could be a knee-jerk bounce in the euro.
"However, we expect dovish rhetoric at the press conference from ECB President Mario Draghi to keep a December move in play. We would therefore recommend using any EUR rally as a better entry level to re-engage in EUR/USD downside."
Against the yen, the euro eased 0.1 percent to 133.10 yen, having fallen as far as 132.60 on Friday, its lowest in three weeks.
Pressure on the euro helped lift the dollar to a six-week high versus a basket of major currencies. The dollar index rose to 80.930, its highest level since Sept. 18. It last stood at 80.769, up 0.1 percent on the day.
The dollar index is now testing resistance at 80.835, the 50 percent retracement of its drop from early September to late October.
The dollar was little changed against the yen at 98.76 yen. Trading activity in the dollar versus the yen is likely to be subdued in Asia on Monday with Japanese markets shut for a public holiday.
The Australian dollar edged higher, supported by stronger-than-expected Australian retail sales.
(Read more: Aussie dollar could tumble 25% by 2016, warns SocGen)
Another factor supporting the Aussie dollar was upbeat Chinese data on Sunday showing activity in China's services sector expanded at the fastest pace in 13 months in October -- a further indication the world's No. 2 economy has stabilized.
The Australian dollar rose 0.4 percent to $0.9480, edging away from Friday's three-week trough of $0.9421.
Up next for the Australian dollar is the Reserve Bank of Australia's policy meeting on Tuesday. All 23 analysts polled by Reuters on Friday expect the RBA to keep its cash rate unchanged at a record low 2.5 percent.