Why the euro is under a cloud

'Greece is on a different direction now': Pro
'Greece is on a different direction now': Pro

The euro may be the Charlie Brown of currencies, as like the comic character, it's under a cloud of negatives, including the Greek election outcome, with analysts tipping further downside.

"It's the ugliest horse in the glue factory," Jeffrey Halley, senior manager for foreign-exchange trading at Saxo Capital Markets, told CNBC, advising selling it against all other G-10 currencies.

The common currency nipped down, trading as low as $1.1098 in Asian hours Monday, its lowest since late 2003 although it later recovered to around $1.1174, after news Greece's anti-austerity party Syriza looked set to win at least 149 seats in the 300 seat parliament -- a larger-than-expected margin.

Read More New Greek government to keep markets on edge

The party ran on a platform of increasing spending and seeking forgiveness of some of its debt, with the rhetoric raising concerns Greece could dig in its heels on its bailout deal with the European Union, possibly defaulting on its bonds or exiting the common currency.

"Doubts over whether the EU bailout program (expiring on February 28) will be extended should keep Greek bonds and the euro under pressure," Mizuho Bank said in a note Monday. It has a forecast for the euro to slip as lows as $1.0950.

That may be optimistic, with RBS saying the currency could fall toward record lows closer to $0.80, although parity with the U.S. dollar is more likely in the meantime. The euro last traded at parity with the U.S. dollar in late 2002, in the wake of the dot-com bust and the late 2001 terrorist attacks in the U.S.

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"[The Greek election outcome] is something that's going to generate a long debate on austerity with no real outcome for months," said Greg Gibbs, senior foreign exchange strategist at RBS. "It's another distraction."

The euro isn't likely to find a bottom until the continent can produce "significantly" stronger inflation accompanied by stronger economic data, Gibbs said.

Ukraine risk

Saxo's Halley isn't certain that Greece is the main driver of the euro's fresh lows Monday, pointing to another cloud from the weekend: a resurgence of fighting in Ukraine between government troops and separatists generally believed to be supported by Russia -- a charge Russia denies. A rebel offensive on the key Ukrainian port of Mariupol killed 30 civilians Saturday.

Read More Euro hits 11-year low: Will it go below $1?

"There's been a lot of chatter among senior officials in Europe this morning about emergency meetings and I can see more lows in relations with Russia coming there," Saxo said.

Others also don't believe the Greek election is the main driver of the euro.

"As we say in German, not everything is eaten as hot as it's cooked," Uwe Parpart, managing director at Reorient Capital, told CNBC, adding he expects Greece's new government will become more conciliarity once it takes power.

"What defines the development in the euro at this point is the quantitative easing that [European Central Bank President Mario] Draghi decided last week," Parpart said. "The euro is going to go to parity I think by year end."

Continue to short the euro: Maybank
Continue to short the euro: Maybank

The ECB on Thursday unleashed an asset-purchase program worth 60 billion euros ($70 billion) a month in a bid to tackle deflation and weak growth in the 19-member euro area head on. Quantitative easing tends to put downward pressure on a currency on the premise that a central bank will print the money it needs to buy bonds and help push interest rates lower.

Even then, there's another cloud lurking on the euro's horizon. Across the pond in the U.S., the Federal Reserve is expected to begin normalizing interest rates this year.

"Certainly, that will see the dollar stronger and the euro weaker," Patrick Bennett, a foreign-exchange strategist at CIBC, said. He expects the euro may slip to $1.08 over the next few months.

-- Dhara Ranasinghe contributed to this article.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1