The loonie lost 0.23 of a cent to 97.64 cents US, after earlier going as low as 97.13 cents US, its lowest level since December.
Leaders of the 27 European Union countries are meeting for a summit that will focus on the region's economic woes and Greece's political crisis.
There had been hopes ahead of the meeting that the leaders would take some action to contain the eurozone's worsening government debt crisis. But those hopes were dashed as Germany continued to refuse to back the idea of jointly issued eurobonds.
Proponents of eurobonds say they could help mitigate the crisis by spreading debt risk across the single currency zone.
Wednesday's summit takes place against a background of increasing worries about Greece's future in the eurozone.
An election slated for June 17 is widely considered to be a referendum on the country's membership in the euro. The main concern is that political parties that are against the terms of the country's bailout package will win the election. If Europe then cuts funding to Greece, the country may face a messy exit from the euro, raising concerns that other countries might follow.
The latest round of eurozone anxiety took a heavy toll on the euro, which reached a new 21-month low against the greenback of US$1.2557, its lowest level since July 2010.
Meanwhile, the commodity sensitive loonie also suffered from sharp slides in prices for oil and metals because of demand concerns and the higher U.S. dollar.
A stronger greenback usually helps depress prices for oil and metals, which are denominated in dollars, as it makes those commodities more expensive for holders of other currencies.
The July crude contract on the New York Mercantile Exchange was down $1.95 to US$89.90 a barrel, its lowest close since late October, 2011.
The July copper contract on the Nymex dropped nine cents to US$3.40 a pound while the flight to safety also hit gold bullion, which retreated $28.20 to US$1,548.40 an ounce.
The loonie failed to find lift from a retail sales report for March that met expectations. Statistics Canada said retail sales rose 0.4 per cent to $39.1 billion in March, more than offsetting the decline in February.
The agency said that warmer than usual weather, especially in Ontario, contributed to the gains.