The euro fell near a one-year low against the US dollar today on fear that Germany will not release funds in time for Greece to avoid a default.

S&P’s decision to downgrade Greece and Portugal was also responsible for knocking the euro lower against the dollar. On Tuesday afternoon, the credit ratings agency slashed Greece’s debt rating to junk status, warning bondholders that they could recover as little as 30% of their initial investment if the country restructures its debt. The agency also lowered Portugal’s credit rating by two notches to A- with a negative outlook, driving yields on Portuguese bonds and other indebted peripherial European countries higher, suggesting Greece’s sovereign problems are beginning to impact the other countries. ‘ With sovereign problems showing signs of contagion, the euro is losing its allure as an alternative currency to the dollar,’ said Akio Yoshino at Societe Generale Asset Management. ‘The currency may test the $1.30 mark sooner rather than later.’ The euro briefly gained against the US dollar earlier today, however, after the Financial Times reported that the IMF is may increase its share of financial aid to Greece by €10 billion from the current €15 billion. Meanwhile, ECB President Jean Claude Trichet and the International Monetary Fund Manager Director Dominique Strauss-Kahn will meet with German officials today to try and convince Germany to release its share of the bailout funds.