The euro on Thursday slid under 1.34 dollars for the first time in nearly two months and struck a five-month low against the yen as the US and Japanese currencies gained from their safe-haven status.
In early European trade, the euro dropped to 1.3386 dollars -- the lowest point since June 22 -- as investors continued to pile into the US unit amid fears of a global economic slowdown caused by the weak US housing sector.
The euro has lost 3.36 percent of its value since hitting a record high of 1.3852 dollars on July 24.
The European single currency later stood at 1.3433 dollars, which compared with 1.3444 late in New York on Wednesday.
"As long as the market is dominated by fears that the crisis -- which is increasingly considered to be a global problem -- will continue or even intensify, the dollar will give up its recent gains very slowly," Commerzbank economist Gavin Friend said.
"Further losses (for the euro) towards 1.3320 (dollars) are possible," said Friend.
Elsewhere on Thursday, the euro tumbled to 155.01 yen -- a level last seen on March 19. The single currency has fallen 8.3 percent in value since reaching an all-time high of 168.95 yen on July 13.
The yen benefited as dealers pulled out of carry trades that involve borrowing cheap credit in countries like Japan to invest in regions with higher interest rates.
For months the yen had been the whipping boy of the foreign exchange market as Japanese savers and speculators sent money overseas to countries such as Britain, New Zealand and Australia where they could earn better returns.
But recent problems in US subprime mortgages for risky borrowers have sparked fears of a credit squeeze, which has in turn triggered a sharp unravelling of this carry trade, pushing up the yen.
"Credit market concerns continue to roil the market," Barclays Capital analysts wrote in a research note.
"In the near term, concern about the macro impact of the recent market turmoil is likely to continue, putting further downward pressure on risky assets."
The Australian dollar on Thursday fell to its lowest level against the US unit in four months, hitting 80.39 US cents after falling through technical support levels.
Meanwhile ongoing action by central banks to ensure ample liquidity in the banking system had little impact on currencies.
The Bank of Japan on Thursday injected 400 billion yen (3.4 million dollars) in extra funds into the money market, the first such move in three days.
The US Federal Reserve on Wednesday also infused seven billion dollars in cash to support the financial system.
"Investors are worried about a credit squeeze in the long term," said Kazuhiko Shibata, manager at Dresdner Bank's Tokyo branch.
"At the moment, the liquidity injection is good for the banking system, but beyond that there are worries. It's not like cash is being handed out to funds," he said.
The euro was changing hands at 1.3433 dollars, against 1.3444 dollars late on Wednesday, 155.73 yen (156.79), 0.6769 pounds (0.6758) and 1.6345 Swiss francs (1.6387).
The dollar stood at 115.95 yen (116.60) and 1.2167 Swiss francs (1.2187).
The pound was being traded at 1.9846 dollars (1.9890).
On the London Bullion Market, the price of gold fell to 665.50 dollars per ounce from 667.25 dollars late on Wednesday.
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