"Portugal's precarious financial situation means that a political crisis could not come at a worse time," said Kathleen Brooks at Forex.com.
"While a bailout of Portugal by itself wouldn't be enough to spook the markets, it could derail the EU summit," the said. The European Union is to meet on Thursday and Friday to decide on a permanent eurozone debt rescue mechanism.
"The Portuguese vote and the EU meetings will effectively decide whether the euro can sustain its recent gains, and our bias is towards increased euro vulnerability," said Vassili Serebriakov, a currency strategist at Wells Fargo bank. The dollar meanwhile was unchanged against Japan's currency at 80.93 yen, and picked up ground against the pound, which was trading at $1.6233 from $1.6370 on Tuesday. The dollar traded lower with the Swiss franc, to 0.9084 francs from 0.9034.