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Analysts believe the possibility of the European Central Bank (ECB) keeping interest rates on hold is helping to limit the euro's downside.
UBS currency strategist Geoffrey Yu commented: "The euro is seeing an unwinding of a slight bounce in risk appetite as investors are selling into an rally in riskier assets."
Nevertheless, pressure will continue to grow on the ECB to reduce interest rates over the next few months as new data suggests a receding inflationary pressures, reports Reuters.
New data has suggested that manufacturing output in the eurozone contracted at a slower rate in January than in previous months.
However, the Markit survey of manufacturing sector activity found that inventory levels fell significantly.
