The euro pared gains against the U.S. dollar on Tuesday after a key vote in Italy's Chamber of Deputies indicated Prime Minister Silvio Berlusconi has lost his parliamentary majority.

The vote piles further pressure on the prime minister to resign.

The euro dropped below $1.38 on Reuters data after the news and last traded at $1.3782, up 0.1 percent on the day versus trading up 0.2 percent prior the news.

Rome has displaced Athens as the epicenter of the euro zone's sovereign debt crisis, with government bond yields nearing unsustainable levels that could force the bloc's third largest economy to seek a bailout that Europe cannot afford.