The euro continued its slide against the dollar, slipping by more than one and a half cents as the latest US rate cut, weak French business confidence data and comments by Germany's Bundesbank president, Mr Ernst Welteke, took their toll.
The single currency was hovering below 85 cents late yesterday, having dipped to 84.35 earlier in the day from 85.95 at the previous close.
Analysts said the latest US rate cut prompted further capital outflows from the euro and into US assets, which rallied in its wake.
"Since the US rate cut, there is more optimism around that the US economy is bottoming out," said Dr Dan McLaughlin, chief economist with Bank of Ireland Group Treasury.
By contrast, a report showing French business confidence at a two-year low was the latest in what Dr McLaughlin described as a "pretty dire" series of economic numbers from France and Germany.
Meanwhile, Mr Welteke said that the European Central Bank's (ECB's) cautious stance was appropriate in the current uncertain environment, further dampening sentiment toward the euro-zone economy.
He also said that deep US interest rate cuts showed monetary policy alone could not spur economic growth after Washington stepped up pressure for ECB action.
US officials told the Wall Street Journal in an article published on Thursday that President Bush favoured aggressive monetary easing by European and Japanese authorities, in comments aimed at a July 7th Group of Seven meeting in Rome.
Asked about the Journal report, Mr Welteke said "we get a lot of advice" but told reporters that the ECB's independence meant it could pick and choose to whom it listened.
Analysts don't see much near term respite for the beleaguered euro. Dr McLaughlin believes it could test its previous all-time low of 82.3 cents some time over the next few weeks.
Others are even more pessimistic. "The euro could go to 80 cents and the main reason is investor flows," said Mr Gianpaolo Mosconi, strategist at Sanwa International. "When we have a global slowdown in the economic cycle, the dollar is seen as a safe haven currency."
