Analysts said sentiment towards the single currency remained broadly negative, not helped by Greek unions pledging to fight austerity measures with another strike this week, prompting an increase in the cost of insuring Greece's sovereign debt.
Investors were disappointed the weekend Group of Seven meeting did not lead to concrete action to tackle the sovereign debt problems of countries such as Greece, Portugal and Spain.
European ministers told their counterparts at the meeting they would ensure Greece sticks to its budget-cutting plan, but analysts said more was needed to restore confidence the problems would not upset the global economic recovery.
"As long as EMU fears still loom and there is no strong signal from EU authorities that they will do something to tackle the situation in Greece, Spain and Portugal then euro downside potential will remain," said Roberto Mialich, currency strategist at Unicredit in Milan.
U.S. Commodity Futures Trading Commission data showed investors increased their bets on further dollar gains in the latest week. Dollar net long positions were at their highest in 11 months while euro short positions jumped close to highs seen after Lehman Brothers collapsed in late 2008.
Mounting worries that Portugal will be the next country in the euro zone to come under pressure after Greece lifted the greenback against the euro. Spain fiscal deficit also was a concern.
The euro slipped below the key 1.3900 level to a session low of $1.3891 EUR=, and the cost of insuring Portuguese government bonds against default rose a record 196 basis points, according to CMA DataVision.
MSCI's all-country world index .MIWDO0000PUS fell 0.4 percent.
U.S. stocks mostly fell after Pfizer Inc (PFE.N) led a broad decline in health-related sectors after the world's biggest drugmaker reported quarterly earnings that missed estimates and forecast profits below expectations.