Dollar Extends Gains vs Euro on Germany Curbs

The dollar extended its gains against the euro Tuesday on persistent concerns deep government spending cuts in Europe will stifle growth and after Germany said it plans to ban naked short-selling.

AP

The euro fell as low as $1.2255 after the German announcement, still slightly above a four-year low of $1.2234 set on electronic trading platform EBS Monday.

The German government plans to ban naked short-selling from midnight in the country's 10 most important financial institutions, a spokesman for the Finance Ministry said Tuesday in Berlin. The ban will also apply to credit default swaps (CDS) on euro government bonds as well as euro government bonds.

"It tends to suggest desperation on the part of the German officials who want to discourage what they consider speculative attacks on euro-zone financial markets," said Michael Malpede, analyst at Easy Forex in Chicago. "The mood is very bearish, but I still think we're due for a correction, as the market is heavily oversold."