The euro hit a new 13-month low against the dollar this morning as strong US manufacturing data led investors to bet that the Federal Reserve is likely to continue tightening its monetary belt.
The steady rise in US rates has sparked a strong rally in the dollar this year, driving it up 12 per cent against the euro as Europe's struggling economy and political upheaval have prompted investors to bail out of the single currency.
An unexpectedly big jump in the Institute for Supply Management's June index last week showed the US manufacturing sector bouncing back from a slowdown and expectations of a jump in non-farm payrolls in June wiped away doubts the Fed will lift rates at least a few more times.
The US labour data is set to be released on Friday. Closely watched non-farm payrolls are forecast to increase by 175,000 in June from 78,000 in May.
At 9.15am, the euro was down 0.2 per cent at $1.1930, after hitting a fresh 13-month low just above $1.1900. The euro erased some of its losses in European trade.
Traders said the next key technical support level for the euro was seen at $1.1890.