The euro dropped to a five-month low against the yen the biggest plunge in European stocks in 6 years on concern the U.S. economy will fall into recession.
The Japanese currency rose against Europe's 16 most active currencies, with the euro falling to a five-month low against the yen before gaining slightly to trade around 153.48 yen.
The dollar also weakened to 105.94 against the yen from 106.87 on January 18. The yes was the strongest against the dollar since May 2005 on speculation a report expected to be released this week will show a drop in existing homes sales in the U.S. in December, further adding to concerns that global growth will slow.
The Bank of Japan is expected to hold interest rates steady at its current 0.50 percent when it is due to announce its policy decision on Tuesday, according to economists surveyed by Bloomberg.
The euro also dropped to 1.6017 versus the Swiss franc, after falling to its lowest level since March. Meanwhile, against the British pound, the euro slipped to 74.35 pence, from 74.78 pence.
Analysts noted that overall market uncertainty were sparked off by fears of a possible recession in the U.S. and concerns over the potential fallout of the subprime mortgage crisis. These appeared to be driving factor behind the sell off in equities and in the currency weakness against the yen.