The euro sank to an eight-month low against the dollar on Monday and is poised to fall further after the Greek government said the debt-ridden country will miss a deficit target set just months ago in a massive bailout package.
Traders and analysts said that with Europe divided over the best cure for the debt crisis and with the possibility of a Greek default looming larger than ever, the euro was likely to grind lower in the coming days.
"A Greek default is a sort of Pandora box no one wants to open. While some markets seem to have priced in such possibility, it looks like euro has still some way to go should it happen," said Teppei Ino, a currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
The euro dived as deep as $1.3323, from $1.3418 in New York on Friday, before nudging back up to $1.3344. The single currency lost 7 percent in September, its largest monthly drop since November 2010.
