The euro zone currency rose against the dollar, though, bolstered by gains in US stocks and a Reuters report quoting a Greek government official as saying Greek, German, and French leaders would hold a conference call on Wednesday.
Earlier, France denied reports its President Nicolas Sarkozy and German Chancellor Angela Merkel would make an announcement about Greece on Tuesday, which confused traders eager to latch onto any near-term trend in the euro.
Traders however, said there was no change in the euro's bearish outlook and that real money remained a seller on rallies, with small sell-stop orders clustered around the $1.3720/25 level.
"The market is still very much focused on the euro. We are back to watching headlines and it seems like there are more rumors than fact," said David Watt, senior currency strategist, at RBC Capital Markets in Toronto.
"In general, it's still a very cautious backdrop and it's hard to see a sustained back-up in the euro and even for that matter a sustained back-up in the European stock markets," he added.
The euro was last at $1.36980, up 0.2 percent on the day. It earlier hit a session low of $1.35578, when Market News International reported China may not buy Italian debt, countering an earlier report from the Financial Times. On Monday, the euro euro had fallen as low as $1.34949, its weakest since February.
The single euro zone currency fell to the day's lowest levels at 104.410 yen before moving back to 105.290, down 0.3 percent and off a 10-year trough of 103.900 yen hit on Monday.
Pressure on the euro mounted after Italy paid higher borrowing costs to sell a new five-year bond.
"The auction results indicate that demand for Italian paper has weakened ... so the euro should struggle to extend any gains," said Valentin Marinov, currency strategist at Citi.
Euro stress was also being triggered by persistent talk French banks could be downgraded by ratings agencies. In June, Moody's placed French banks on CreditWatch negative.
Shares in BNP Paribas fell 7.5 percent at one stage on Tuesday, prompting the French bank to categorically deny comments about its funding attributed to an anonymous source in the Wall Street Journal. The bank described its US dollar funding as solid and strong.
EURO DOWNSIDE
Key levels on the downside in the euro are now the February low around $1.34280 and the 50 percent retracement of the euro's June 2010-May 2011 rally around $1.34082.
The dollar slipped back from Monday's 7-month high versus a currency basket of 77.784 to trade 0.6 percent lower at 77.102.
Against the yen it eased 0.5 percent to 76.850 yen. The US currency has held in a slim range roughly between 76.40 and 77.60 with markets wary of more yen-weakening intervention by Japanese authorities.
The euro was little changed versus the Swiss franc at 1.20398 francs, hovering above the 1.2000 at which the Swiss National Bank has vowed to rein in the franc.
The Australian and New Zealand dollars both struggled against their US counterpart, while the Swedish and Norwegian crowns remained weak after selling off sharply against the euro on Monday.
All four currencies are considered to be relatively high risk as their economies track the broad health of the global economy, and tend to depreciate during times of uncertainty.
Copyright Reuters, 2011