The euro bought $1.4902 compared with $1.4973 late Monday in New York.

The British pound also fell, buying $1.6530 compared with $1.6621 while the dollar slid to 88.61 Japanese yen from 89.02 yen late Monday in New York.

Japanese shares fell to a new four-month low Tuesday, after overnight gains on Wall Street amid growing pessimism over a recovery in the world's No. 2 economy. The benchmark Nikkei 225 stock average dropped to its lowest point since July 17.

Sentiment in Tokyo also turned downbeat because of a strong yen, which pressures Japanese exporters by eroding their overseas profits.

"Yesterday's dollar slide was halted just above the previous lows, after Tokyo shares fell on concerns that Japanese banks will sell more shares to replenish capital," Michael Hewson, a currency analyst at CMC markets, said in a Tuesday research note.

Hewson said the euro versus the dollar didn't break the $1.50 mark Monday and failure to gain a foothold above that key level doesn't bode well for the euro, which could next fall to the $1.4800 to $1.4810 level.

Hewson said, however, that if the euro moves higher than the $1.5060 to $1.5070 level, than currency markets could target the euro going as high as $1.5290.

Investors will be looking to Germany's Ifo economic sentiment survey later Tuesday for an indication on the direction of Europe's largest economy.