The euro plunged below $1.24 for the first time in nearly two years Wednesday as traders fretted over Spain's economy.
The yield on Spain's 10-year bonds jumped above 6.7 percent Wednesday, matching the level it hit at the height of the eurozone crisis late last year. That's a sign that investors are concerned about the country's ability to pay down its debt.
Greece, Portugal and Ireland were forced to get financial lifelines after their borrowing rates rose above 7 percent.
Worries about Spain's financial sector intensified last week when Bankia, the country's fourth-largest bank, said late last week it would need an additional $24 billion in government support. Traders are concerned that Europe's fifth-largest economy may have trouble saving its banks, possibly worsening the region's ongoing debt crisis.
On Tuesday, Egan-Jones Ratings Company downgraded Spain saying that it may have trouble paying its debt as growth slows and the unemployment rate rises.
The euro sunk to $1.2382 late Wednesday from $1.2487 late Tuesday. The euro fell as low as $1.2376 earlier, its lowest point against the dollar since July 1, 2010. The euro has fallen over 6 percent against dollar this month.
In other trading Wednesday, the British pound fell to $1.5490 from $1.5634. The dollar rose to 0.9699 Swiss franc from 0.9618 Swiss franc and to 1.0293 Canadian dollar from 1.0242 Canadian dollar.
The dollar fell to 79.07 Japanese yen from 79.51 yen.