Tokyo - The euro fell to a near nine-year low against the dollar in Asia on Monday after the head of the European Central Bank hinted that policymakers would unleash fresh easing measures to counter weakness in the eurozone.
The single currency's losses added to a sell-off on Friday that came in response to the publication of Mario Draghi's interview with German business daily Handelsblatt.
The unit plunged to $1.1865 at one point today, the lowest since March 2006, before bouncing back to $1.1943.
However, it is still well down from $1.2002 in New York and the $1.2097 on Wednesday before the new year break.
It also dropped to ¥143.95 from ¥144.58 in US trade, while the dollar changed hands at ¥120.54 against ¥120.46.
In the interview Draghi said deflation was a threat to the eurozone and the ECB needs to be prepared to counter it. He added that the risk that the central bank will not be able to push inflation up "has increased compared to six months ago".
Political turmoil in Greece was also weighing on the euro.
With a general election set for January 25, the head of the left-wing Syriza party said Saturday that if he won he would start "necessary change" in Europe and end painful austerity policies.
Markets see a rollback of measures required under an IMF-EU bailout of the country as further weakening the eurozone economy.
"The reasons to be selling the euro were pretty clear over the weekend: Draghi being a step closer to QE (quantitative easing) and deepening concerns about the Greek political situation," Sean Callow, a currency strategist at Westpac Banking Corporation in Sydney, told Bloomberg News.
Traders meanwhile are eyeing the release on Friday of US jobs data, with a good reading likely to reinforce the view that the Federal Reserve will hike interest rates around the middle of the year, which would further boost the dollar.
The greenback rose against other Asia-Pacific currencies.
It strengthened to Sg$1.3360 from Sg$1.3277 on Friday, to 33.05 Thai baht from 33.00 baht, to 63.34 Indian rupees from 63.31 rupees, and to Tw$32.02 from Tw$31.74.
The greenback also rose to 44.99 Philippine pesos from 44.72 pesos, and to 12 672.00 Indonesian rupiah from 12 564.50.
The Australian dollar fell to 80.61 US cents against 81.37 cents, while the Chinese yuan bought ¥19.37 from ¥19.33.