The euro has continued its downward trajectory as sentiment remained overwhelmingly negative against the currency.

An increasing No vote in polls before the Danish referendum on joining the currency and lack of intervention or co-ordinated central bank support to buy euros also undermined the currency.

The euro closed at $0.8527 in European trading from $0.8596 on Friday. But it did hold above the low set in Far East trading yesterday of $0.8510.

According to Mr Jim Power, chief economist at Bank of Ireland, traders are still a little nervous of selling the currency aggressively after the quasi intervention of last week. The euro got a brief stimulus last Thursday after the ECB said it would buy €2.5 billion, using interest earned on its foreign exchange reserves. ECB officials said the action did not constitute intervention, or buying simply to turn the euro around.

Traders are looking to the Group of Seven industrialised nations meeting in Prague this weekend where large-scale intervention will have to be on the informal agenda, at least. ECB council member and president of the Bundesbank, Mr Ernst Welteke, said G-7 countries would discuss exchange rates in Prague.

Analysts still doubt the meeting will produce anything to help the euro. The group may only come up with a statement saying currencies need to reflect economic fundamentals, and that they are watching exchange rates closely.

The market will also be focusing on the result of Germany's business confidence or Ifo survey tomorrow.

"The ECB's attempt to support the currency was not successful," said Ms Valerie Plagnol, an economist at HSBC Markets in Paris. "There are plenty of reasons for investors to stay in the US."

The euro also failed to benefit from comments by ECB vice president Mr Christian Noyer in the French newspaper Les Echos. The euro is "dangerously undervalued" and it could see a "brutal" reversal, he said.

Continuing capital flows into the US are also supporting the dollar. Foreign investor purchases of US stocks and bonds as well as direct investment in businesses and real estate rose by $222.7 billion (€261.2 billion) from April to June, following a $236.5 billion jump in the first quarter.

The Danish referendum on September 28th is also weighing on sentiment. Those opposing the euro rose to 48 per cent from the weekend's 44 per cent, a Gallup poll suggests.