Mind the (rate) gap
"Essentially the interest-rate differential theme is still there, with talk of more QE from the ECB reinstating that argument," Jane Foley, a senior currency strategist at Rabobank, told CNBC.
Rabobank's 12-month view on the euro falling to $1.05 remained unchanged, Foley said.
But she added that a fall in the risk appetite seen at the start of the year that had encouraged investors to use the euro as a funding currency for riskier trades had declined and this should prevent the euro from falling too far.
"We don't expect the euro to fall to parity against the dollar," Foley said.
Still, analysts added that bearish sentiment towards the euro, which has declined 7.5 percent so far this year, was reasserting itself.
"Euro/dollar was net sold for the first time in over a month, with asset managers leading the selling," UBS currency strategist Geoffrey Yu said in a note on Monday assessing flows in the currency markets.