The euro struggled to find any friends in Asia on Thursday, on renewed fears of contagion in Europe, while the U.S. dollar remained on the defensive as Washington showed no signs of progress in debt agreement.
The euro gapped lower against almost everything, dropping 1 percent to $1.4367 against the U.S. dollar, with stops noted below $1.440. It last traded at $1.4365.
It also fell against the safe-haven Swiss franc, going as low as 1.1492 francs, not far from the lifetime low of 1.1397 touched earlier in July. It was last at 1.1500.
The single currency took a particularly nasty spill on the Australian dollar, diving 1.6 percent to a six-month trough of A$1.3030 .
The euro beating was prompted by contrasting statements by euro zone leaders which highlighted the fragility of last week's deal to rescue Greece.
S&P's downgrade of Greece didn't help with the agency pointing out the likelihood that the nation will likely need more bailout assistance within the next two years.
Yield spreads pushed higher with Italy, particularly hit ahead of an up to 8.5 billion euros bond auction.
The drop in the euro helped the dollar index recovered some ground. It was up flat at 74.087, off an earlier trough of 73.421, its lowest since early May.
"After selling dollars en masse over the past week, short-term positioning and renewed concerns over Europe saw the dollar catch a bid with the currency strengthening," said David Scutt, a trader at Arab Bank Australia.
Still, the U.S. dollar remained on the defensive against safe-haven currencies as the prospect of a U.S. downgrade is becoming real. Washington lawmakers were showing no progress on raising the nation's debt ceiling ahead of the Aug. 2 deadline.
The dollar was pinned at 77.93 yen , just off a four-month low of 77.54 yen struck on Wednesday and loitered around all-time lows of 0.8005 Swiss francs .
One early mover in Asia was the New Zealand dollar , which climbed to $0.8730 after the Reserve Bank of New Zealand flagged a rate hike as early as September.
The Australian dollar was holding up well at $1.1025 having hit a fresh 29-year peak of $1.1081 offshore.
An alarmingly high inflation reading out on Wednesday has forced the futures market to abandon all hope of a cut in interest rates this year and price in some chance of a hike as early as next week.
The Antipodeans have been huge beneficiaries of recent U.S. selling as investors favored currencies backed by stronger economies.