NEW YORK -- Driven by renewed concerns over Greece's political uncertainty and Spain's banking sector crisis, the euro touched new lows in nearly two years against the dollar this week after consecutive losses.

The health of Spain's banks and Greece's possible exit from the euro zone continued to weigh on the euro this week as the shared currency dropped to the 22-month low against the dollar this week.

The rating agency Egan-Jones on Tuesday downgraded Spain's credit rating from B to BB-, as the potential bailout of Spain's banks is likely to hurt the country's credit.

The European Central Bank rejected the plan to recapitalize Spain's fourth-largest bank, Bankia, raising concerns that Spain would be the next country in the euro zone to suffer a debt crisis.

The yields of Spain's 10-year government bonds on Wednesday surged to 6.68 percent, almost the highest level since the euro's inception.

Meanwhile, Italy's borrowing costs also soared as yields of its 10-year government bonds hit 6 percent for the first time since January on growing concerns about the country's solvency ability.

The European Central Bank and the European Commission warned that if no stronger measures and tougher fiscal discipline were implemented, the single currency area could face the risk of disintegration.

"Fear and uncertainty are the ultimate market poison, and of course, the ongoing European turmoil has fueled both," said Joel Kruger, currency strategist of DailyFX. "Instead of speculating if Greece will egress, market players are now wondering how messy the fallout will be."

The euro tumbled below 1.24 this week, a level never seen since July 2010. However, as some analysts note, there is no sign that the shared currency will rebound in near future.

The dollar benefited from the euro's weakness. The greenback rose more than 5 percent against the euro in May, the most increase since last September. The dollar index gained 0.6 percent to 82.885 this week.

However, disappointing US economic news may weaken the dollar's recent rising momentum. The most anticipated non-farm payroll report of May came as the last straw to crunch the market.

According to the report, the US economy only added 69,000 jobs, the fewest in a year, while the unemployment rate climbed up to 8.2 percent from 8.1 percent.

Earlier reports had already signaled the weakness of the US job market. The US Labor Department reported that the US jobless claims rose 10,000 to a seasonally adjusted 383,000 last week, gaining for the fourth-straight week.
Meanwhile, the US private sector only added 133,000 jobs in May, much lower than previous estimates of 150,000 increases, according to a report by Automatic Data Processing.

US consumers were less optimistic about the economic prospect as the US consumer confidence dropped to the 4-month low in May.

The US Commerce Department on Thursday revised the year-on-year growth rate of gross domestic product (GDP) for the first quarter to 1.9 percent from 2.2 percent. The downward revision suggested the US economic recovery was not as optimistic as investors had expected.

The yield on the benchmark 10-year US Treasury note plunged to 1.46 percent, the lowest level on record, as investors sought refuge in market turmoil.