On May 25, the euro slumped to near two-year lows against the dollar after being rattled by fears of a possible Greek exit from the euro zone and the risk other debt-plagued countries could also leave the bloc.

A plea from Catalonia, Spain's wealthiest autonomous region, for help from the central government to refinance its debt this year hit the single currency that was on track for its worst weekly showing in five months.

"The Catalonia news was a big deal because it implies that the Spanish government may have to take on more debt and it cannot afford to do so," said Richard Franulovich, senior currency strategist at Westpac Securities in New York.

"It looks like all the euros that were bought need to be resold. For now, it's all about contagion," he added.

The euro slipped 0.2 percent to $1.25116 in late afternoon New York trading, after earlier falling to a nearly two-year low of $1.2495. The single currency has lost 5.5 percent against the dollar so far this month.

"I think markets are pretty complacent about a Greek exit," said Gabriel de Kock, executive director of FX research at Morgan Stanley in New York.

"Everyone says it's going to happen, but if it does, the Europeans will have to do extraordinary things to avoid contagion of the sort that could knock out Ireland, Spain and Portugal pretty quickly. So people are not ready."