The yen was the big winner, benefiting from safe-haven inflows from investors spooked by comments from European leaders who warned that the problems facing Greece could spread to other countries.
The euro was on the defensive at $1.2815, having fallen to as low as $1.2787 as option barriers were knocked out at $1.2800 in early Asian trade.
The euro has now broken key support levels and the next level is seen around $1.2550 -- its March 9, 2009 low -- with many in the market eyeing its 2009 low of $1.2455.
The single currency lost more than 1 percent Wednesday and has shed more than 3.5 percent so far this week. Against the yen, the euro was at 120.31, having lost over 2 percent on Wednesday as investors fled to the relative safety of the lower-yielding yen.
"The focus stays on the euro as the contagion trade persists," said JP Morgan in a morning note. "Today's ECB meeting has grown immensely in importance as the redeployment of some form of credit crisis tools seems increasingly possible."
The European Central Bank holds its monthly meeting later on Thursday and, while it is expected to keep rates unchanged at 1 percent, it should seek to assure markets that it can prevent the Greek debt crisis spreading.
The ECB meet comes as the cost of insuring Greek, Spanish and Portuguese debt against default has been rising, while Moody's put Portugal's credit rating on review for a possible downgrade on Wednesday.
The euro's weakness was helping the dollar index hold impressive gains this week. The index .DXY was up at 84.11, not far from a one-year high of 84.31 hit earlier in the session.
The dollar was up marginally on the yen at 93.90 yen, from 93.65 yen late on Wednesday when it lost over 1 percent. However, the dollar's rise could be capped by selling by exporters while some traders said a fall in Asian shares could spark another round of yen buying. Tokyo resumed trade on Thursday after the Golden Week holidays.Earlier, the dollar got a boost from data showing U.S. private sector employers added 32,000 jobs last month, bolstering the view that U.S. interest rates will likely rise from record lows well before action on rates in the euro zone.
Sterling traded near five-week low against the dollar at $1.5097 ahead of Britain's parliamentary election, with two polls pointing to a "hung parliament,."
Meanwhile, the New Zealand dollar jumped over 1 percent from late Wednesday to $0.7260 after Reserve Bank of New Zealand Governor Alan Bollard indicated that rate hikes would start from mid-year.
Also, helping the kiwi were surprisingly strong jobs numbers.a famous violinist
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