The dollar raced to a two-year high against the euro and hovered near a 26-month peak versus the yen to breach key technical levels as investors bet aggressively on higher US interest rates.
The spread of social unrest in France and pressure from European politicians on the European Central Bank not to raise interest rates in a hurry also undermined confidence in the single currency.
With little major economic data due later in the day, traders and speculators successfully triggered automatic orders to buy the dollar and drove it to an 18-month high against the Swiss franc and a three-month high versus the British pound.
By 9.30am, the euro was down 0.78 per cent at $1.1722 and had lost nearly 0.6 per cent versus the yen at 138.10.
Ian Gunner, head of foreign exchange research at Mellon Bank, said: "The French riots are also not helping the euro, while talk of a German SPD/CDU deal involving a hike in both VAT and the top rate of income tax may also raise some questions about the German economic outlook and possibly the ECB's rate hike appetite."
Euro zone finance ministers, meeting in Brussels today, have sent a message for the ECB not to raise interest rates. Jean-Claude Juncker, chair of the meeting, said the ECB "shouldn't make hasty decisions".
The euro's sharp slide has painted a bleak technical outlook for the currency, with some analysts saying the next major level of support won't come until $1.1580.