"We had a quick 50-odd point drop, which seems to be month-end related. Clearly the euro has been quite soft for some time. We touched below $1.10 earlier in August and we've struggled really to rebound from that point. The underlying softness that we've seen persist in the past month seems very much intact," said Shaun Osborne, chief foreign exchange strategist at Scotia Capital.
The move also began shortly after President Donald Trump tweeted that the euro was dropping "like crazy" and lamented the state of the US dollar, attributing its strength to Federal Reserve policy. A weaker dollar would send the euro higher, suggesting the tweet did not have a direct effect on the pair. The euro was last trading at $1.0976 against the dollar, down 0.71% on the day.
As the dollar rose, the offshore Chinese yuan headed toward its biggest monthly decline in 25 years as the two countries prepared for the implementation of new retaliatory tariffs on Sunday. The dollar index was 0.38% higher at 98.884, closing the month little moved after having been whipped around by trade headlines. Against the dollar, the offshore yuan was 0.28% weaker at 7.163, set for a 3.69% fall in August, it's biggest monthly drop since 1994. An additional 5% tariff on $125 billion of goods from China is slated to kick in on Sunday. Investors fear the intensifying trade dispute could lead the US economy into recession.