The euro has dropped in value following the electoral defeat of ruling parties in France and Greece as new anxiety about the fate of EU austerity policies rattles financial markets.

The euro has dropped in value following the electoral defeat of ruling parties in France and Greece as new anxiety about the fate of EU austerity policies rattles financial markets.

The currency sank to 1.29 dollars on Monday, its lowest level since January, after Socialist Francois Hollande beat President Nicolas Sarkozy in France and Greek voters punished pro-austerity parties in their Sunday parliamentary election.

The anti-austerity, pro-growth slogans of Hollande and left-wing opposition parties in Greece resonated with voter’s anger of strict belt-tightening under their incumbent governments.

The outcome of the elections also caused Asian and Australian markets to plunge as investors are concerned in Japan and China about the currency bloc policy direction. Stocks in German and French financial markets also dropped value by 2.2 and 1.7 respectively.

Meanwhile, France's president-elect Francois Hollande has hailed his victory as part of a movement rising against fiscal austerity in Europe.

The fate of restrictive policies aimed at solving the debt and deficit crisis in the common currency region now hangs in the balance, while governments with big eurozone debt holdings are watching closely.