‘Perfect storm’ could send euro even lower

The euro traded near a 28-month low on Monday, and analysts forecast its decline could continue, after a last-dash vote in Greece failed to secure a new president for the country.

A snap general election was called for January following the result, which could potentially jeopardize this year's economic progress, as well as delicate negotiations with the country's "troika" of international loan brokers.

The currency fell to $1.2165 in early trading—the nadir for the single currency since European Central Bank President Mario Draghi pledged to do "whatever it takes" to save the euro zone in July 2012. It recovered a little following the results of the Greek vote, but remained subdued at $1.2180, below a key resistance level of $1.2300.

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"A perfect political and economic storm is brewing," said BBH currency strategists led by Marc Chandler in a research note published Monday.

Despite the small bounce in the euro after the results were out, Societe Generale's Kit Juckes said the currency could continue to decline against the dollar this week. He predicted the euro could move to, or through, $1.20, taking it to lows last seen at the apex of the euro zone debt crisis in 2010.

"The failure (of Monday's vote in Greece) was widely expected, so the immediate response is minimal, despite Greek yields being higher and Greek stocks having failed to bounce," the macro strategist told CNBC via email.

"I think if the euro starts to fall, it could gather some downward momentum, given the uncertainty about the outcome of the elections."

Read MoreGreek stocks tank as snap election called

Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi, forecast that the currency would fall below $1.20 in the first three months of 2015. The euro has typically bottomed around $1.20 over the last 10 years, and Hardman warned of the risk of a sharp adjustment downwards if the currency fell through that level.

"Our base case is for the euro to continue to grind lower," Hardman told CNBC on Monday. "We are looking for a move down below $1.20 within the first quarter, and then our year-end level is $1.14, deeper into undervalued territory."

Hardman saw additional pressure on the euro if the European Central Bank launched a much-anticipated "full-blown" quantitative easing program, which he forecast for next month.

Read MoreTrack the euro live with CNBC