The European currency hovered near a 5 week low against the U.S dollar on speculation credit ratings of more European nations will be cut after Greece's debt ranking was lowered by Fitch Ratings. Fitch yesterday lowered Greece's credit rating one step to BBB+, the third-lowest investment grade, and said the outlook for the rating is negative.

The British pound declined to its weakest level in almost 2 months versus the Dollar on concern that Dubai's state-controlled companies will have to sell U.K. assets to pay for loan obligations. There are also concerns that companies in Dubai, which are falling behind on debt payments, may need to sell U.K. property, according to economists. Sterling fell roughly half a percent to the day's low of $1.6376 as the market awaited the UK government's pre-budget report on Wednesday, which is expected to highlight the dismal state of the Britain's finances.

Analysts said that since most investors are worried that more European countries' sovereign ratings will be downgraded the U.S dollar will probably be bought and the EUR will likely be sold, as risk aversion prevails.