The euro fell against the dollar Tuesday on expectations the U.S. government's massive stimulus package will be approved in the Senate later in the day.
The 16-nation euro bought $1.2882 in European morning trading, down from $1.3024 late Monday in New York.
The British pound also fell, buying $1.4853 Tuesday from $1.4916 the night before.
"The big story for financial markets remains the progress of the U.S. bailout package through the Senate later today," James Hughes, a currency analyst at CMC Markets said.
"French and Italian production data could give the (euro) some momentum in early trade, too, although natural support against the dollar above the $1.28 level has been seen overnight," Hughes added.
The $827 billion U.S. plan aims to fight the country's deepest recession in decades by stemming massive job losses and boosting spending. An $820 billion version of the bill was pushed through the House of Representatives two weeks ago.
On Tuesday, Treasury Secretary Timothy Geithner is also expected to unveil a revamping of the remaining Troubled Asset Relief Program to support the country's troubled banking system.
The new plan purportedly will include a partnership with the private sector to get toxic loans off banks' balance sheets, getting them to loan more freely and also focus on mortgage aid to homeowners fighting foreclosure.
In other trading, the dollar bought 91.28 Japanese yen Tuesday, down from 91.43 yen late Monday in New York.
