The euro fell to its lowest level since November against the dollar on Today as political turmoil in Italy and Spain weighed, while the safe haven yen posted broad gains amid widespread risk aversion.
EURUSD was down to 1.1571 by 08:11 GMT, the weakest level since November 11.
The euro initially spiked on Monday after Italy’s President Sergio Mattarella blocked the nomination of a Eurosceptic finance minister. But the move prompted Italy’s populist parties to abandon their bid to form a coalition government and the country is now expected to go to the polls again later this year.
Investors fear that fresh elections could be seen as a quasi-referendum on Italy’s role in the European Union and may end up bolstering anti euro parties even more.
Meanwhile in Spain Prime Minister Mariano Rajoy is facing a vote of no confidence in the government on Friday, after a corruption case involving members of the ruling party.
The euro fell to eleven-month lows against the yen, with EURJPY falling to 125.81 at 08:13 GMT.
The single currency has fallen around 4% against both the dollar and the yen so far, this month.
The euro was also lower against the traditional safe haven Swiss franc, with EURCHF down to 1.1487 at 08:14 GMT, the lowest level since March 5.
The dollar fell to three-week lows against the firmer yen, with USDJPY losing 0.48% to trade at 108.70 at 08:15 GMT.
The pair hit a high of 109.82 on Monday amid optimism that a planned summit between the U.S. and North Korea appeared to be back on track, but gains were quickly erased amid worries over euro zone political concerns.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.16% at 94.50, the strongest level since mid-November on the back of the weaker euro.