The euro dropped sharply on Monday, moving toward an eight-month low hit last week, as riskier assets were hammered across the board with markets waiting for more details on fresh efforts from European officials to tackle the debt crisis there. The euro started cautiously higher, bobbing up to $1.3585 amid reports that the EU leaders were considering beefing up the European Financial Stability Fund and new measures to ring-fence debt-ridden Greece, Portugal and Ireland. But that was short-lived as Asian bourses opened sharply lower and emerging economy currencies, like the Korean won, suffered more substantial losses. \"We believe this type of plan would be seen as a credible solution to the crisis,\" said Warren Hogan, chief economist at ANZ Bank in Sydney. \"However, this plan is still only in the \'rumour\' stage, and it may face some tough hurdles in order to be passed by all EU authorities, indeed headlines are already suggesting some German dissent.\" German deputy finance minister Joerg Asmussen said Greece will probably have to wait beyond a key meeting early next month for a decision on an urgently needed bailout. The common European currency dropped 0.5 percent to $1.3429, with some proprietary accounts and long-term investors spotted among the sellers, pushing it close to an eight-month low of $1.3384 plumbed last Thursday. Support for the euro is at $1.3418, with major resistance at $1.3585. A Financial Times report that euro zone officials are waiting for the ratification of the July 21 action plan by the German Bundestag this week, before starting serious talks on increasing the rescue fund\'s firepower or asking for a bigger writedown in private sector holdings of Greek debt was also cited by traders. The euro skidded 0.6 percent against the yen, changing hands at 102.57, a stone\'s throw from a decade low of 102.211 yen. Implied volatilities on euro/yen soared after option barriers below 103 yen were triggered with more triggers looming at 102, 101.80 and 101.50 yen. Option traders, thinking that a fall in spot euro/yen below 100 yen is inevitable, are buying euro/yen puts to prepare themselves for trigger of barriers below 102 yen, with 1-month euro/yen volatilities up to 20 percent, their highest since the days after the so-called flash crash in May last year. Risk reversal spreads stand at 6.25/8.25 percent in favor of euro/yen puts, the highest since early 2009.News reports over the weekend suggested concern now appeared to be turning toward protecting the banking system and preventing contagion through enhancing the 440 billion euro-EFSF more than rescuing Greece. Indeed, as the idea of a Greek default has gained pace, there is talk international authorities were working on a plan toward a \"managed default\" for Greece sometime around the next G20 meeting in Paris in November. At the same time, the European Central Bank (ECB) would likely reinstate a one-year lending facility to shore up banks, while intensifying recession fears could force the ECB to cut rates at its next meeting on Oct 6. \"The lurch lower in risk appetite can only reflect a growing fear that policymakers will be incapable of acting in time or with sufficient potency to turn things around,\" said Hervé Goulletquer, analyst at Credit Agricole. \"Given so much hinges on restoring confidence, not just of financial markets but of all economic agents, this trauma and the associated grim headlines risk tipping the global economy over the edge.\" S&P\'s warning that Europe\'s plans to ramp up its fight against the crisis could result in credit downgrades also dampened investor\'s fragile enthusiasm. The major beneficiary of outflows from less liquid currencies, the dollar, edged up against a basket of major currencies .DXY, resuming its ascent toward a seven-month high above 78.798. It last changed hands at 78.549. But the greenback nudged 0.2 percent lower versus the yen on selling from Japanese exporters. It last changed hands at 76.42 yen, not far from an all-time low of 75.94 yen. The Australian dollar was steady around 0.9775, with its next support level at the Sept 23 low of $0.9669 and then the 50 percent retracement of the year\'s low/high at $0.9571. Resistance is seen around $0.9867, then $0.9927.