"The number one reason for the euro's fall is a strong US economy," said David Brickman, international economist at PaineWebber in London. "If you took away the US economy, the euro would not be falling."

The euro fell more than a cent on the day to a low of $0.8975, some 23 percent below its launch level in January, 1999, and was still hovering around the key $0.90 level by 0945 GMT. Chartists said the next major support level was at $0.88.

The dollar showed its resilience to pressure from a choppy US stock market, strengthening even though the blue-chip Dow Jones Industrial Average slipped 0.75 percent and the technology-weighted Nasdaq composite tumbled 4.36 percent on Tuesday.

Investors remained confident that the US Federal Reserve will engineer a soft-landing for the red-hot American economy, analysts said.

"Certainly at this moment in time, investors are still confident in US economic policy and there's been no sign of capital outflow in response to the equity market volatility," said Neil MacKinnon, senior currency strategist at Merrill Lynch in London.

Traders said additional concerns about enlargement of the European Union and Greece's bid to join the single currency were putting further pressure on the euro.

"Never stand in the way of a falling piano," said a trader from a US bank in London of the euro's demise.

The European Central Bank said on Wednesday it had "ongoing concern" about Greece's progress in meeting key criteria to join monetary Union and urged it to take strong fiscal measures. The ECB said in its convergence report that while Greece's debt to gross domestic product and deficit to GDP ratios were declining, it was concerned about whether they were falling fast enough.

The European Commission, meanwhile, said Greece should maintain a tight budgetary policy stance. The European Commission also said on Wednesday Sweden did not yet fulfill all the criteria for membership of the euro, citing the country's decision not to put the crown in Europe's exchange rate mechanism (ERM).

Bundesbank council member Hans-Juergen Koebnick told Reuters in an interview conducted late on Tuesday the euro's weakness was not due to worries about EU enlargement or Greece's EMU bid.

The dollar was firm against other major currencies amid expectations that the Fed might opt for an interest rate increase of a half percentage point at its policy meeting on May 16, instead of by a more gradualist quarter-point hike, given continued strong economic data in recent months."Expectations that the Fed will be aggressive in its May 16 meeting are keeping the dollar well-supported. I expect the yen to move in a 100-112 range against the dollar," said Fong Cheng Hong, head of treasury research at DBS Bank in Singapore. The dollar traded on Wednesday within a quarter yen oftwo-month highs around 109 yen set on Monday.

With the Tokyo market off for the rest of the week due to Japan's "Golden Week" holidays, traders said liquidity in dollar/yen was very low.

Elsewhere, the Australian dollar was firmer as the currency shook off some of its recent lethargy and garnered strength from a quarter point interest rate rise by the Reserve Bank of Australia and news of a narrowing Australian trade deficit on Wednesday.

The Aussie was trading around US$0.5920 at 0955 GMT, more than a cent above 18-month lows set on Monday.