The dollar continued on its downward spiral on Tuesday, falling to an all-time low against the euro and briefly reaching parity with the Canadian dollar for the first time in almost 30 years.

The dollar fell on expectations of lower U.S. interest rates to come and a report that Saudi Arabia may unpeg the riyal from the dollar.

The dollar dropped past the $1.40 barrier versus the euro to reach $1.4080 per euro at 2:55 pm in New York, its lowest point since the inception of the euro in 1999. The dollar also fell to 114.47 yen.

Meanwhile for the first time since 1976, the dollar reached parity with the Canadian dollar but later fell back to 99.87 U.S. cents versus the loonie.

Currency markets are still feeling the effects of Tuesday's half percentage point cut of the Federal funds rate to 4.75 by the U.S. Federal Reserve. The move has driven consumers to sell off the dollar and choose more desirable investments.

The dollar also declined on a report from London's Daily Telegraph, which quoted analysts speculating that Saudi Arabia may cut its link to the dollar, which could prompt divestment in the dollar in the Middle East.