The euro tumbled to an 11-month low against the dollar this week as concerns over the European debt crisis intensified and upbeat U.S. economic data helped to stimulate confidence in the American currency.

The results of an EU summit last weekend disappointed investors as they believed the agreement reached at the gathering would be unable to uproot the European debt crisis.

Furthermore, Merkel on Tuesday reiterated that she opposes expanding the size of the European Stability Mechanism. The news worried investors because they believe that the 500-billion euro fund is not enough to cover Spain and Italy if those countries need a bailout.

The euro tumbled to the lowest level since January against the dollar on Tuesday, approaching the critical psychological level of 1.30.

On Wednesday, the Italian government sold 3 billion euros of 5-year bonds and saw yields surged to 6.47 percent, the highest yield at auction since the euro's inception.

The surging borrowing costs worried investors and pressured the euro. The shared currency dipped further and broke down 1.30 against the dollar, a level never seen this year.

However, currency analysts said that the euro/dollar pair was unlikely to drop further through the end of the year because the selloff was losing momentum.

International Monetary Fund chief Christine Lagarde said Thursday that the IMF would seek aid from countries outside the eurozone to help with the monetary union's debt crisis and warned that world economic outlook is "gloomy."

The euro recovered from its 11-month trough against the dollar on Thursday as the pair climbed back to above 1.30.

Meanwhile, American economic data continued to show good signs of U.S. economic recovery.

The U.S. Labor Department said initial jobless claims dropped sharply last week to the lowest level since 2008, suggesting that the American labor market continued to improve.

The agency also reported that the producer price index rose 0.3 percent compared with last month, which was below previous estimates.

However, the U.S. Commerce Department said retail sales increased just 0.2 percent in November, less than previous expectations of a 0.5 percent gain. The data raised doubts over whether the American economic recovery was stable.

On Tuesday, the Federal Reserve wrapped up its final monetary policy meeting of the year, pledging to keep interest rates low through the middle of 2013 as the market had expected.

The dollar index gained 2.1 percent this week, while the euro lost 2.5 percent against the dollar.

VietNamNet/Xinhuanet