The euro fell to its lowest in more than four years against the dollar on Wednesday as a sell-off in the single currency gathered pace after Germany's move to ban naked short-selling of some securities rattled investors. Germany on Tuesday announced a ban that covered some high-risk bets involving euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany's 10 top financial institutions.
The dollar index, which tracks the US unit's performance against a basket of major currencies, rose to a 14-month high of 87.458. The euro was down 0.1 percent at $1.2193. In early Asian trade, it slid as low as $1.2143 on trading platform EBS, its lowest since April 2006. Traders said option barriers at $1.22 were taken out and more are lined up at $1.21, $1.20 and right down to $1.15.
The euro's next support is seen at $1.2133, a 50 percent retracement from its all-time low of $0.8225 hit in October 2000 to its record peak of $1.6040 reached on EBS in July 2008.
If that level is broken, the next support level would be at the psychologically important $1.2000. Traders said Germany's move limits risks players can take in euro assets, likely prompting investors to shift their funds elsewhere. A wider ban would only spur the outflow of money from the eurozone, putting downward pressure on the single currency, they said. Against the Japanese currency, the euro slid 0.4 percent to 112.13 yen, crawling towards an eight-year low of 110.49 yen struck earlier this month.
The yen rose across the board, lifted by investor risk aversion moves. The higher-yielding Australian dollar dropped 0.9 percent to 78.58 yen. The greenback fell 0.4 percent to 91.91 yen. Sterling fell as low as $1.4239, its lowest since late March 2009.
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