The euro hits a five-month low against dollar and sterling. Photo credit: Brooks Elliott

The euro hit a five-month low against the dollar and sterling today, weakened by continuing concern over Greece’s debt, pushing the currency below key support levels and prompting widespread selling.

The euro fell 1.1 percent to $1.4166, its weakest since mid-August, after breaking through its 200-day moving average support level of $1.4295. Traders said that selling accelerated as stop-loss orders were triggered when the euro broke under the support level, Reuters reported.

Reuters also reported that the dollar rose across the board, partly due to Bank of America’s recently announced fourth quarter earnings, and partly boosted by a slide in commodity currencies, on reports that some Chinese banks have been instructed to curb lending, which may be a move that slow China’s economic recovery. The pound rose to a four-month high against the euro, aided by the single currency’s fall, Cadbury’s recent acceptance of Kraft’s bid, and higher than expected UK inflation raised the spectre of interest rate increases.

The euro is unlikely to keep the pace of its losses in the near future. Carl Hammer, currency strategist at SEB in Stockholm told Reuters, “We could see a continued slide in the euro, but we do acknowledge that the market is becoming overstretched [in selling the currency].”

According to the BBC, the euro rose steadily against the dollar in 2009, and the recent fall is most welcomed by European exporters – a weaker euro means cheaper products for overseas customers.