News Analysis: Investors bullish on U.S. dollar in Q2 (2)

However, the euro's good start proved to be short-lived and is expected to slip further to the dollar, some analysts said.

"The euro has lost the momentum as the European recovery face problems from both economic and political perspective," Alessio de Longis, the vice president and portfolio manager of the Oppenheimer Currency Opportunities Fund, told Xinhua.

In February, Italian election turned out to be a disappointment and then shortly after the disappointment, there was the unnecessary uncertainty that was created by miscommunication of European officials with respect to the treatment of depositors in Cyprus, said Longis.

Longis also added "the Cyprus crisis has happened and it' s now behind us now. Cyprus created a resetting in the trading level of the euro and I think now the effect has been fully reflected on the rate."

On top of the negative news from the euro area, analysts believe what has validated market perception is the fact that the European economic data have decelerated.

There were more negative surprises than positive surprises on economic data released for the last three months, particularly the euro-zone purchasing manager index, indicating businesses have continued to show inability to bounce back and away from recessionary territories, while the rest of the world has been showing a little bit more resilience, particularly the United States.

Analysts expect the deceleration of the data to continue and all these uncertainties on the political side in Europe will affect business confidence, consumer confidence, thus hurting growth in the euro zone

The Oppenheimer currency analysts team think it' s very possible that the euro will stay around the level of 1.25 in the next couple of months, because euro-zone growth is failing to accelerate and countries like Italy and Spain continue to announce marginal but still negative revisions of their budget forecast to their growth forecast.