Graphic: renjith krishnan

The euro hit fresh two-year lows under $1.22 on Thursday as Spanish austerity measures failed to alleviate eurozone debt crisis fears and as the US seemed unlikely to announce any new stimulus measures.

At about mid-day, the euro dived to $1.2185, the lowest level since June 30, 2010. That compared with $1.2238 late in New York on Wednesday.

“Spanish bonds are under renewed downward pressure as investors doubt the wisdom of the latest fiscal consolidation measures announced by the government,” RIA Capital Markets analyst Nick Stamenkovic told AFP.

“Indeed, the risk is that the latest budget deficit reduction measures compound the worsening growth outlook and deteriorating fiscal dynamics. Hence the euro is moving to new lows as confidence in the single currency continues to ebb away.”

The euro was also on the back foot after minutes from the most recent US Federal Reserve meeting suggested that officials were split on further stimulus measures to aid the American economy.

“There was no smoking gun from the latest Fed minutes for an imminent easing. Hence fears of (more stimulus) have eased, supporting the dollar,” added Stamenkovic. - Sapa-AFP