It later recovered to 99.60 yen, with liquidity thin as Asian, British and US markets closed for New Year holidays. Versus the dollar, the euro was at $1.2941, less than a cent above its 2011 low of $1.2858 hit last week.
Worries about sovereign debt levels and a lack of policy solutions to the region's 2-year-old debt crisis were expected to push the euro lower in the coming weeks and months.
However, the euro's slide may be limited by periodic short-covering rallies as investors unwind hefty bets against the currency, with Commodity Futures Trading Commission data on Friday showing short euro positions swelled to a record in the latest week.
"There's still a lot of pressure on the euro due to concerns about the refinancing needs of some euro zone countries in the first quarter," said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen.
"This is driving many to safer assets and currencies, like the Japanese yen."
However, he said the substantial number of short euro positions could limit the euro's falls, potentially enabling it to rebound back above $1.30 versus the dollar, especially if US. ISM and jobs data this week point to an improving US economy.
Nevertheless, in the absence of a comprehensive European policy response to the debt crisis, the euro could test its 2010 low of $1.1876 next year, some traders said.
Policymakers marked the 10th anniversary on Sunday of the introduction of euro notes and coins by urging governments to save and consolidate to overcome their debt crises, while warning 2012 would be harder than 2011.
Concerns about the massive task facing European leaders as they struggle to contain the region's debt crisis were highlighted as Spain's new government warned last week its 2011 budget deficit would be larger than expected.
A deteriorating euro zone economy will also worry investors, with many anticipating a recession in the region. A survey on Monday showed euro zone manufacturing activity declined for a fifth consecutive month in December.
From around $1.33 in January last year, the euro soared to $1.4939 by May, then began a steady descent as the crisis that began in smaller countries such as Greece and Ireland spread to the larger core economies of Italy and Spain.
Italy, the euro zone's third-largest economy, remains at the centre of the debt crisis, and its borrowing needs could overwhelm the bloc's financial defenses if it were forced to seek an international bailout.
In the coming months, auctions of euro zone bonds will be closely watched by investors who are nervous that appetite to buy peripheral debt may be waning.
"We remain a sell on rallies (with the euro) as we tend to think the euro zone crisis will actually get worse before it gets better," Kathleen Brooks, research director at FOREX.com in a note to clients.
The euro's troubles have benefited the dollar and yen, both of which tend to attract safe-haven flows in times of trouble.
Against a basket of major currencies, the dollar .DXY was up 0.1 percent at 80.237, having hit a near one-year high of 80.854 last week. The dollar fell to a one-month low against the yen of around 76.30 yen.
Still, questions remain about the strength of the US economy and whether the Federal Reserve will opt for a third round of monetary easing to boost lending and growth.
Sterling dipped 0.25 percent to $1.5496, while the Australian dollar was steady at $1.0220.
