The euro fell to the lowest in almost two years against the dollar as Spain struggled to rescue its troubled banks, adding to signs the European debt crisis is spreading to the region's larger economies.
The 17-nation currency slid for a seventh day versus the yen, the longest losing streak in four months, after Italy sold less than its maximum target at a debt auction. The yen and dollar strengthened as investors sought safer assets after a European report showed economic confidence dropped more than economists estimated in May. Asian currencies weakened, pushing the Bloomberg-JPMorgan Asia Dollar Index toward its worst monthly loss since September.
"Questions about how much does Spain need, who will fund it and also in the meantime can they stop a bank run in Spain, are enormous political hurdles," said Jane Foley, a senior currency strategist at Rabobank International in London. "These will be questions that either make or break the euro zone."
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