On May 11, the single currency, euro, slid to a 3-1/2-month low in volatile trade, primarily because of political uncertainty in Greece and hefty losses disclosed by U.S. bank JPMorgan Chase spurred risk aversion.

The single currency has dropped against the United States dollar in eight of 10 sessions for a cumulative 2.4 percent decline on Greece concerns.

Greek Socialist party leader Evangelos Venizelos recently said he was unable to form a government, sending the country hurtling toward a new vote.

"If the same thing happens in the second round and you do not get a government in Greece, we think that will weigh on the euro," said Tom Higgins, global macro strategist at Standish Mellon Asset Management in Boston.

Economic data in the recent past has pointed to recession across Europe and this may prompt the Central Bank to take action sooner rather than later.

"I think those factors are all going to come together to lead to a further down leg in the euro," said Higgins. "We would target something in the low to mid-1.20s over the next six to 12 months."

Options market participants are betting on more weakness for the single currency.

"The net result is we are in a far worse position now than prior to the election," said Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi. "The probability of Greece not being in the single currency by the end of this year is considerably higher and that eliminates risks to the upside in euro/dollar for the next few months."