The single currency has come under pressure in recent weeks as the dollar rallied across the board on expectations for higher US interest rates.
Widespread riots in France, along with pressure from euro zone finance ministers and business leaders for the ECB not to raise rates, have also soured sentiment on the euro.
The market expects the ECB to raise interest rates as early as December but the rhetoric among euro zone monetary policymakers is mixed.
ECB President Jean-Claude Trichet repeated the bank can move interest rates any time, adding that strong vigilance is needed.
"There is a reluctance to push the euro/dollar higher because of riots in France and pressure from euro zone finance ministers not to raise rates," said Daragh Maher, senior currency strategist at Calyon.
"The language from the ECB suggests they are not promising to do anything but they are not promising not to do anything either. The market will seize on anything that suggests a greater chance of a December rate hike."
By 1245 GMT, the euro was down a quarter percent on the day at $1.1750, having fallen to a two-year low of $1.1706 on Tuesday. Against the yen, the euro was down 0.15 percent to 137.91. The dollar was steady at 117.34 yen.
ECB Governing Council member Axel Weber said price risks have significantly risen in the past weeks, adding that the ECB decided last week that interest rates are appropriate. "His comments are across-the-board hawkish... But the market has to see action. The rhetoric doesn't excite the market anymore," said Marios Maratheftis, currency strategist at Standard Chartered.
Weber, along with ECB President Jean-Claude Trichet and another Governing Council member Vitor Constancio speak in separate events on Thursday.
France imposed emergency measures in 38 urban zones, towns and cities including Paris on Wednesday after youths threw firebombs at police and torched hundreds of cars in a 13th night of violence.
Some analysts say the riots reflect to an extent the social consequences of prolonged anaemic growth in the eurozone. Finance ministers, business and labour unions ramped up pressure on the ECB to refrain from hiking euro zone interest rates, saying it risked stifling economic recovery.
The German government's council of economic advisers said in the annual report that the ECB will "at most" only raise interest rates slightly in 2006 and monetary conditions are likely to remain good.
Underscoring the euro's plight, the currency fell on Tuesday through its January 1999 launch level at $1.1747 to its weakest since November 2003.
The euro zone's structural problems are also coming under spotlight, with the Financial Times reporting the ECB will try to deter EU states from overspending by warning that it will refuse to accept their sovereign debt as collateral if their credit ratings slip too far.
Trichet said the ECB's policy has always been that it accepts debt as collateral with minimum credit rating of A.
"This structural issue is a long-term bearish note for the euro and could have a significant impact on the confidence in the single currency in the event that bond spreads widen further and individual nations become unable to provide sovereign debt as collateral," HBOS Treasury Services said in a note to clients.
In the United States, the Federal Reserve's 16-month tightening campaign has taken the benchmark rate to 4 percent, and with the central bank expected to keep pushing rates up investors have increasingly shifted funds to the dollar.
The dollar has gained around 14 percent against the euro and yen this year, but its recent rally is slowing in the absence of US data. The next major release is Thursday's trade deficit figures, which could inject some caution among dollar bulls.