The euro rebounded from a four-year dollar low in volatile trade this afternoon amid speculation that Switzerland's central bank may intervene to support the Swiss franc.
The euro rallied to stand at $1.2395 this evening.
It had earlier tumbled to $1.2144 in Asian trade - the lowest level since April 2006 - on deepening worries over European debt and after Germany moved to ban a speculative trading practice.
Germany's securities market regulator overnight slapped a ban on naked short-selling in the shares of 10 financial institutions and euro zone government bonds, a move it hoped would put an end to severe fluctuations.
Naked short-selling occurs when investors sell securities they do not own and have not even borrowed, hoping to be able to buy them back later at a lower price, thereby earning a profit. In regular short-selling, the trader borrows the security before selling it.
Analysts said that the volatile market was vulnerable to sharp swings.
