The EUR tumbled against most of its currency crosses Tuesday on concern nations with the highest deficits will struggle to meet the European Union's austerity requirements.

The EUR's drop accelerated as speculation increased that European financial institutions are worse than anticipated after Germany said it will ban naked short-selling and naked credit- default swaps of euro-area government bonds and the Bank of Italy allowed lenders to exclude losses on government bonds.

Germany's BaFin financial-services regulator said that it will introduce a temporary ban on naked short-selling and naked credit-default swaps of euro-area government bonds starting at midnight. The ban will also apply to naked short-selling in shares of 10 banks and insurers.

The EUR hit a low of $1.2185 yesterday, the lowest level since 2006. Worries about the long-term economic impact of austerity measures adopted across Europe have weighed on the single currency in recent weeks. Since the beginning of the year, the EUR has lost more than 14% versus the greenback. The EUR also fell more than 1.5% to 112.10 against the JPY.