The euro has lurched lower against the US dollar after an early attempt to rebound failed to overcome the poor sentiment surrounding the single currency.

Dealers said that a renewed test at parity with the US dollar now appears inevitable for the euro, particularly with Wall Street's prospects looking increasingly rosy.

By the close of European trading, the euro traded lower at $1.0090 from $1.0122 late Friday in New York.

ABN Amro currency analyst Jesper Dannesboe said the euro's break at $1.0160 on Friday basically cemented its ill fate, after some speculative positions were caught long by the unexpectedly benign US consumer price index report and consequently the rally in US assets.

Elsewhere, the yen was looking strong across the board, following a rally on the Nikkei and the Bank of Japan's move to absorb excess liquidity in the money markets overnight.

The pound sterling was bid against the euro after it hit a fresh high at 0.6173.