The euro traded at $1.3969 in Tokyo afternoon trade, down from the day's high of $1.3995. It traded at $1.3908 in New York late Wednesday.
The euro rose to 106.50 yen before falling back to 106.15 yen against 105.98 in New York.
Officials announced the deal following talks in Brussels between leaders of the eurozone and the Institute of International Finance banking lobby to force the private sector to share the pain of Greece's debt burden.
The haircut will enable Greece to reduce its debt by 100 billion euros, French President Nicolas Sarkozy said.
Convincing banks to erase billions in Greek debt was a key part of a grand deal leaders had pledged to deliver at a eurozone summit, along with a bank recapitalisation and a beefed-up rescue fund to soothe fears of a global recession.
Sarkozy said eurozone leaders have agreed to leverage the firepower of their bailout fund to one trillion euros.
He announced the agreement at the close of 10 hours of summit talks aimed at hammering out a package of measures to contain Europe's two-year debt crisis.
However, there was some scepticism about the deal.
"They are so good at presenting things like this, but they've just bought some time and the debt issues are still far from over," said Masanobu Ishikawa, a senior dealer at Tokyo Forex and Ueda Harlow.
The deal was largely within expectations and the euro will remain under downward pressure in the medium-term, he told Dow Jones Newswires.
The yen strengthened after the central bank of Japan announced further monetary easing as widely expected.
The dollar was at 75.97 yen after the announcement, down from 76.21 yen in New York and close to its post-World War II low of 75.71 yen in New York.
The bank said it would boost its asset buying fund, a key policy tool, by 5.0 trillion yen to 55 trillion yen ($723 billion), with the extra amount to be designated for the purchase of Japanese government bonds.
The yen has attracted purchases for its safe-haven status despite repeated warnings from Japanese officials of possible intervention to weaken the unit amid concern over its possible impact on the nation's exporters.
"It is clear that speculators are rushing into the yen while watching the European situation, rather than the (yen's) moves reflecting economic fundamentals," Japan's Finance Minister Jun Azumi said Thursday.
"I have kept saying that we will take decisive steps against any excessive movements regarding market speculation, so I will closely monitor how the Tokyo market moves during the day," Azumi told reporters.
The European deal sent the Aussie dollar up to 104.89 US cents, from 104.12 cents before.
The dollar eased to Sg$1.2631 from Sg$1.2667 on Wednesday, to 1,124.50 South Korean won from 1,130.60 and to 43.05 Philippine pesos from 43.22.
It also fell to 30.76 Thai baht from 30.82 and to Tw$30.09 from Tw$30.14 while rising to 8,895.00 Indonesian rupiah from 8,865.00.