Still, the euro recouped much of its early losses in Europe as the perception grew that the initial round of selling in Asia had been overdone, considering the G7 had not been seen making the currency's weakness much of an issue.

"I think some people in Asia probably sold some on the back of the G7 news...but Europe has had a slightly more tepid response," said Cameron Crise, foreign exchange strategist at Warburg Dillon Read in London.

"There's a little bird on your shoulder telling you it's eventually going to go higher, so you have a hard time betting the ranch it's going lower from here," he added. "There are a lot of investors and hedgers who look at par and say 'what seems more likely - $1.10 or $0.90?' and $1.10 seems more likely." The euro bounce back above $1.0050 by European mid-sessionafter slipping to the lowest level of the year within a whisker of $1.00.

Francis Breedon, senior foreign exchange strategist at Lehman Brothers in London, said the G7 meeting on Saturday had been more important for the yen than the euro, given Japanese authorities' more acute concern about their currency. European officials on Monday voiced their usual optimism regarding the long-term outlook for the currency.

Bundesbank President Ernst Welteke said on Monday he was not worried by the euro's post-G7 decline. "I don'T know if you can actually see why the G7 would issue a statement on the euro," Breedon said, noting that the euro near parity was in a state of flux where it could easily swing in either direction.