The euro fell below $1.20 for the first time since early 2006 on Monday, the dollar starting 2015 as most banks believe it intends to go on this year - higher across the board.

Euro zone inflation numbers trickle out in the first half of the week and are expected to underline the contrast in fortunes between the US and most of the rest of the developed world that has sent the dollar soaring since mid-2014.

While US Federal Reserve minutes on Wednesday will be picked through for clues on how soon it will drop its pledge to keep interest rates low for a "considerable" time, central banks in Europe and Japan are pondering how and when to ease policy further.

The euro, also hurt over the Christmas period by the launch of a potentially destabilising election campaign in Greece, fell to $1.18605 in Asian trade. It had recovered to $1.1945 in early deals in Europe, down 0.5 per cent on the day.

"Increasing expectation for the ECB to deliver quantitative easing on Jan. 22, combined with rising political concerns ahead of Greece's general election should maintain downward pressure on the euro," BNP Paribas strategist Michael Sneyd said.

"The bullish momentum on the dollar should persist."

Sterling was also down 0.2 per cent, at $1.5296, having fallen to a 17-month low of $1.5185 in Asian trading. The yen fared somewhat better, just 0.1 per cent weaker on the day at 120.38 yen per dollar.

Dealers in London said there was room for a pause in dollar strength after the initial surge. Some said $1.1975-90 would be a good level to sell the euro again, with stronger support for the single currency around $1.1850.

"The dollar is stabilising around 120 yen for now but volatility is likely to remain high as the euro continues to cause turbulence," Koji Fukaya, president of FPJ Securities in Tokyo, said.

"The dollar will remain strong against the yen in the medium term but a one-sided rally we saw last year is unlikely to be repeated this year," Fukaya said.

The euro shed nearly 12 per cent against the dollar in 2014 and ECB chief Mario Draghi late last week underscored the potential for the bank to move into outright money-printing shortly.

Some believe the Greek election on January 25 will help stay the bank's hand this month, pushing back expectations for QE till March, but the prospect that euro zone-wide inflation on Wednesday will hit zero underlines the risk the bank will make its move.

German numbers, the biggest single component of the bloc-wide figures, are due later on Monday and forecast at 0.3 percent year-on-year by Reuters polling of economists. - Reuters