The euro slumped to fresh monthly lows on Monday, even as a wave of merger activity generated optimism that stocks can push higher.
However, recent economic data has raised fears that a double-dip recession is in the cards for the US and perhaps Europe, fueling interest in the perceived safety of the dollar and yen.
The euro fell sharply in late morning dealing against the buck, plunging to a new monthly low of $1.2645.
Earlier the single currency dropped to a nearly 2-month low of 108.05 versus the yen, edging closer to June’s 9-year low of 107.30.
Overnight, the euro hit a 2-month low of 0.8141 against the sterling.
Traders considered another round of discouraging news out of the euro area.
The eurozone’s private sector growth decelerated slightly in August as both manufacturing and services activity slowed, figures showed on Monday.
German manufacturing growth slowed to a six-month low in August, but service sector growth accelerated to a three-year high, figures showed on Monday.
Hungary’s central bank decided to keep the key policy rate unchanged at 5.25% during its monetary policy council meeting on Monday.