LONDON, England - May 17, 2010 - Nervous trading sent the euro into a nosedive early today, as fears of further debt crisis contagion and stalling growth crept across dealing rooms.

The euro, already under pressure in New York before the weekend, plunged to a four-year low of $1.2237 against the greenback in Asian trade this morning, sending stock markets in Japan and South Korea sharply lower.

The euro’s slide propelled the battered currency through its October 2008 low of $1.2329 — a support level that many had thought would hold out longer.

By early afternoon it had clawed its way back to $1.2339, but analysts said that a sell-off was likely to continue over the coming weeks.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The euro is caught between a rock and a hard place at the moment and it is hard to see how it can extract itself from this uncomfortable position, in the near term at least.

“Indeed, we suspect that the euro is headed down towards $1.15 over the coming weeks.”