The euro, which hit a two-month low against the dollar on Tuesday as hopes that Greece would receive essential aid soon faded, faces further losses as concern about Greece's future grow, currency analysts warn.
The International Monetary Fund and euro zone officials on Monday
Now more losses could be in store for the single currency, which has already shed 3.7 percent of its value against the dollar since hitting a peak in mid-September.
"It's been a very protracted process and we have to say that it's taken rather longer than we had anticipated," Sean Callow, senior currency strategist with Westpac Bank in Sydney told CNBC Asia's "Squawk Box" on Tuesday, referring to the negotiations over Greece.
"We're becoming increasingly bearish on the euro and we have pretty much given up on our previous expectation for it to recapture $1.30," he added.
The euro zone is facing pressure to ink a deal on Greece as Athens has to redeem 5 billion euros ($6.35 billion) worth of treasury bills on November 16 and was dependent on funds from the next euro zone aid tranche to tide it over.
(Read More: Greece Running Out of Cash; Government Under Threat)
This is looking increasingly unlikely. The next meeting of euro zone's finance ministers, who met in Brussels on Monday, takes place on November 20, according to Euro group president Jean-Claude Juncker.
It does not look like the money will be available in time and Greece now plans to issue new one-month and three-month treasury bills on Tuesday to raise one billion euros and 2.1 billion euros, respectively.
But this is a short-term fix and until an agreement is reached on how to make Greek debt more sustainable, the euro will likely remain under pressure, analysts say.
Change of Fortune
The euro received a significant boost on July 26 after European Central Bank president Mario Draghi said the bank will do "whatever it takes" to prevent the euro zone from collapsing, sending the currency about 8 percent higher over 3 months. This rally looks like it's unravelling as markets worry about the consequences of a Greek debt default or the nation's exit from the euro zone.
"We know that the Greek government will run out of money if it does not receive its next aid payment by the end of the month," Kathy Lien, managing director of BK Asset Management said in a note on Tuesday.
"While everyone knows that the stakes are high and a default by Greece would spell big trouble for the euro zone as a whole, policymakers are dragging their heels and it is hurting the euro."
Lien said she is awaiting more comments on Greece, especially on Germany's vote, on which the disbursement of any additional aid to Greece depends. Any additional release of German financing to Greece, as well as alterations to the terms of its bailout, would require passage by the full German parliament, which will be in session next week.
"If we are lucky, Germany will vote and approve Greek aid next week because if they fail to do so, investors will become even more concerned about what could happen at the end of the month," she said.
Until a deal is reached, the euro could test its 100-day moving average level around $1.2639, Credit Agricole's head of global forex strategy Mitul Kotecha said in a note on Tuesday.
"Some clues to the timing of the next Greek loan disbursement will undoubtedly help the currency, assuming that it is not too far into the future," Kotecha said.
"The euro will also need today's (Tuesday's) Greek treasury bill auction to go well to give it some support. Unfortunately for the currency the risks are still skewed to the downside," he said.
-By CNBC's Jean Chua.