The euro tumbled to near a nine-year low on Monday, undercut by growing concerns that Greek parliamentary elections will result in a left-wing government that will aim to cancel austerity measures along with a big portion of Greece's debt.
The left-wing Syriza party holds a narrowing lead ahead of Greece's Jan. 25 general election over the conservative New Democracy party, opinion polls show. New Democracy imposed unpopular budget cuts under Greece's bailout deal.
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German Chancellor Angela Merkel's spokesman said on Monday that her government was interested in stabilizing the euro bloc and retaining all of its members, including Greece.
Expectations for monetary policy easing in the euro zone, the opposite of a trend toward tightening policy in the United States, also cast a pall over the euro.
The dollar index, which measures the greenback against a basket of currencies, hit a nine-year high of 91.775 before setting back to 91.38, up 0.22 percent on the day.
The euro traded as low as $1.18605 on the EBS trading platform in early Asian trade before steadying at $1.19275.
The euro's decline coincides with data showing German inflation slowed to its lowest levels in over five years in December. This raises pressure on European Central Bank President Mario Draghi to unveil unconventional measures to ward off a deflationary spiral.
Benchmark German 10-year yields fell below 0.50 percent, while U.S. 10-year Treasury yields dropped to 2.62 percent.
U.S. Federal Reserve minutes on Wednesday will be parsed for clues on when the central bank will drop its pledge to keep interest rates low for a considerable time.
Against the yen, the euro hit a two-month low of 142.7 yen. The dollar dropped 0.81 percent near 119.50 yen.
Sterling was down 0.64 percent at $1.5227, having fallen to a 17-month low of $1.5185 in Asian trading. The dollar rose to a more than four-year high of 1.0108 Swiss francs.