Growing pressure for more policy easing in the euro zone pinned the euro near a 10-week low on Monday while persistent tension in emerging markets drove Hungary's forint to a 10-month trough and weighed on global stocks.
Stock markets in Europe reflected the weak appetite for riskier assets as they slid 0.6 percent, following shares in Asia.
MSCI's global index posted its largest monthly decline in January since May 2012. Emerging markets lost 6.6 percent for their worst January since 2009.
"It is a global macro question and global risk sentiment is really at stake here," said John Hardy, head of FX strategy at Saxo bank in Copenhagen. "There are a lot of event risks this week and it just feels like markets are trying to figure out where they are."
The week ahead provides a raft of global business surveys and jobs data from the United States to offer a clearer view on the global economy, while the European Central Bank (ECB) might well consider easing policy at its meeting on Thursday.
The prospect of an ECB move weighed on the euro on Monday, pinning it near 10-week lows at $1.3490 following a break of major support at $1.3506.
A fall in euro zone inflation to 0.7 percent last month - far below the ECB's target of just under 2 percent - has raised the spectre of deflation in the bloc, and with tumbling emerging market currencies threatening to compound the problem, calls are increasing on the bank to take action.
The pressure on the shared currency was eased slightly by data showing euro zone factories enjoyed their strongest month since mid-2011 in January and the first growth in Greek manufacturing activity since August 2009.
Source: Reuters
