Euro extended Friday's decline and fell to a fresh 4-year low at 1.1876 in Asian morning after breaching Friday's low made in New York at 1.1955 on lingering European debt worries. Although the single currency staged a modest rebound on active short-covering and hit 1.1992 in European mid-day after release of stronger-than-expected German industrial production data, the single currency later retreated as U.S. stocks extended intra-day losses. The single currency finally ended the day at 1.1924 while DJI fell by 1.16% and closed at 9816.49. Eur/jpy also fell to a fresh 8-1/2 year low at 108.06 while eur/chf slumped to a fresh record low at 1.3850.

On economic front, German industrial production rose by 2.8% m/m and 29.6% y/y in April versus economists' forecast of 0.2% m/m and 25.4% y/y, however, renewed selling interest emerged below 1.2000 and pressured price again.

In other news, European finance ministers concluded their two-day meeting in Luxembourg on Monday and indicated that they were in no rush to halt the euro's slump against the dollar, instead, they said that euro's current level would be a tonic for the economic recovery. ECB's Noyer said Europe had to make sure surveillance would be better organized to avoid problems in the future. The ministers also agreed details of a E440 billion special purpose vehicle fund (SPV) to aid eurozone countries if they needed help. Eurogroup's Juncker said the SPV had just been set up on Monday in the form of a limited-liability company under Luxembourg law. In addition, Juncker said the SPV could be operational in July and eurozone would pursue fiscal consolidation beyond 2011.

Juncker added that the austerity plans of Spain and Portugal were significant and courageous but further consolidation beyond 2011 would be needed. Eurozone Finance Ministers would look at the measures of the two nations again in July. EU's president also said that the finance ministers agreed budget deficit cuts could be launched earlier for countries with large debt and each spring national budget plans would be viewed by the EU commission.

Versus the Japanese yen, the greenback once fell to 90.97 in Asian morning on active yen buying due to risk aversion, however, the pair rebounded strongly from there and hit an intra-day high of 92.10. However, the pair retreated sharply as weakness in U.S. stocks sparked off another wave of risk aversion .

The British pound briefly dipped to 1.4388 at London opening but the pair subsequently rallied on active cross buying in sterling. The pair managed to hit 1.4563 briefly before retreating from there. The pound drew support as Prime Minister Cameron prepared voters for deep spending cuts and said the overall reductions needed to tackle the U.K.’s budget shortfall would be set out, increasing investor confidence his government could tackle a record budget deficit.

Economic data to be released on Tuesday include: U.K. BRC retail sales, Japan Current account, Trade balance, Leading indicators, Swiss Jobless rate, Germany Trade balance ,Current account, Industrial production, Swiss CPI and Canada Housing starts.