The single currency briefly fell below the $1.07 mark in late afternoon trading, or down more than one per cent, taking it to its lowest level since 2003.
It wasn't helped by the strength of the dollar, which has risen in response to optimistic employment figures released last week.
The fall raises the spectre of parity against the dollar, which, although it would be bad for those travelling abroad, would provide a boost for local exporters.
Peter O'Flanagan, head of foreign exchange trading, at Clear Treasury, said parity "certainly appears to be the trajectory at the moment".
If the market gets its June rate rise from the [Fed], [parity] could well be the case. There are plenty of ifs and but between now and then and one concern voiced through yesterday was if there was a large enough market for ECB purchases.
He also pointed out that events in Greece could also serve to drive the currency lower.
European stocks sold off after some shaky comments as Eurozone finance ministers met to discuss reforms proposed by Athens, Greek leaders once again taking an aggressive line on early talks.