In late afternoon deals, the euro slumped to $1.2941 -- which was the lowest point since January 11. It later pulled back slightly to stand at $1.2962. At the same time, the shared eurozone unit plunged to 100.80 yen. That was a whisker away from the ten-year low of 100.76 yen that was hit in early October. "While Italy managed to have a successful auction of short-term six-month debt, market jitters are still there in regards to the 10-year debt on offer by Italy in tomorrow's trading session," said MoneyCorp analyst Mark Deans. "Italian 10-year yields rallied after dipping initially after the short-term debt auction, moving back above 6.9 percent. "With the overhanging fear about the eurozone sovereign debt crisis, the open of US cash equity trading saw a flight to safety and a move into safe haven currencies like the Japanese yen and US dollar." Deans added that thin trading conditions ahead of the year-end were also exacerbating moves in the foreign exchange market. Italy paid sharply lower rates on Wednesday to raise 9.0 billion euros ($11.8 billion) in a six-month bond sale as tensions over the eurozone's third economy eased after its tough austerity plan. The sale was being seen as a bellwether for eurozone sentiment at the end of a year in which borrowing costs have spiked to record highs over fears that the euro itself could disintegrate because of high debt levels. Wednesday's rate was 3.251 percent -- half the 6.504 percent paid for a similar operation in November and also lower than the 3.535 percent in October. "It's a quiet week in the City as most people take advantage of the bank holidays to extend their Christmas breaks," added Forex.com analyst Kathleen Brooks. "However, the eurozone debt crisis never takes a break. As we enter the third consecutive year where European debt concerns have dominated market sentiment, the effects of the crisis continue to rock markets."