The euro depreciated against the dollar and the pound on Monday after election results in France and Greece called into question European austerity plans.
Propaganda parties in Greece performed poorly, while Francois Hollande won the French presidency, promising to focus more on growth.
The euro fell to $ 1,295, the lowest level since January, and fell to three-year lows against the pound.
Major European stock markets fell early before recovering.
In Germany, the DAX fell by more than 2%, but by mid-afternoon it fell by only 0.1%.
In Paris, CAC 40 recovered to trade at 0.7%.
Shares in Athens fell as much as 8.3%. In London, markets were closed for bank holidays.
In New York, the Dow Jones opened 0.3%.
Interest rates on some government debts have also risen, indicating a decline in investor confidence. Yields on the secondary markets for Greek 10-year bonds rose from 20% to 22.2%.
Asian markets also fell, with the Nikkei in Tokyo falling 2.8%. South Korea’s KOSPI fell 1.8 percent and Hong Kong’s Hang Seng fell 2.4 percent.
In Greece, the Socialist Party of Passok saw an unexpectedly bad result, while Syriza, which opposed austerity measures, had a strong performance.
The result called into question whether the country’s policies, which currently include large spending cuts, tax increases and job losses in the country, could continue.
“The knee reaction was a little strong, but there is chaos in Greece [politicians] to be against a deal that has already been agreed is almost like progress going back a year and a half, “ said Scott Freese, president of StreetOne Financial.
Although the French result was expected, there are still concerns about whether Francois Hollande will be able to work as closely with German Chancellor Angela Merkel as his predecessor, Nicolas Sarkozy.
The two were the driving force behind the eurozone fiscal treaty.
Francois Hollande stood on a platform to promote growth instead of concentrating on austerity.
“Global financial markets are not thrilled by the idea that France and Greece have voted for governments that are less willing to work with Germans on a consistent approach to tackling their fiscal deficits.” said Dick Green on Briefing.com.
During the campaign, Francois Hollande pledged to renegotiate the fiscal pact, in which European countries agreed to tight control over their budgets.
But after his victory and the defeat of Greece’s ruling coalition parties, Angel Merkel said the deal was “not for grabbing”.
“In Europe, it is a matter of principle that after elections, whether in small or large countries, we do not renegotiate what has already been agreed.” she said.
“Otherwise, we could not work together in Europe.”
The rating agency Standard and Poor’s, which downgraded France from its top three A rating in January, said the election result would not have a direct impact on its credit status.
“We will analyze the political choice of the president-elect of France and the new government, taking into account the outcome of the parliamentary elections in June,” said the agency.
“The chances are that the next move will be reduced. Chances are, it will be a little earlier than it would otherwise be, but the agencies themselves will have a measured response. “ said Georg Grodski, head of credit research at Legal and General.
“There is still hope that Mr. Hollande will reduce some of his rhetoric and accept that you cannot solve an economic problem by living on foreign money.”