The single currency fell to $1.3933 in Asian trade - its lowest level since September 2007. It later edged up slightly to $1.3965.

An increasingly gloomy outlook for the eurozone region has hit the euro hard.

The European Commission believes some countries in the 15-nation bloc are on the brink of recession.

European jitters

The commission has said that three countries - UK, Germany and Spain - would see two negative quarters of economic growth in a row this year and would therefore be considered to be in recession.

The commission also downgraded its growth outlook for the second time this year.

It said the 15-nation euro bloc would now grow by 1.3% this year, against previous projections of 1.7%.

As a result, some analysts are predicting that the euro will continue to be weak.

"As Europe and even emerging economies struggle from the fall-out of the sub-prime crisis, there is sentiment that the US is doing relatively well compared with the rest of the world," said currency analyst Saburo Matsumoto at Sumitomo Trust Bank.

BBC