Fears that Europe's largest economy may be stalling pushed the euro to a 16-month low against the dollar Wednesday.
The German government estimated Wednesday that the country's economy contracted at an annual rate of 0.25 percent in the last quarter of 2011. The exact figure will be released next month and could be revised.
Traders are concerned that if Germany falls into a recession it would be an ominous sign for the rest of Europe. Germany's economy would have to contract in two consecutive quarters in order to be in a recession.
The euro fell to $1.2697 late Wednesday from $1.2790 late Tuesday. It dropped as low as $1.2661 Wednesday afternoon, its lowest point since Sept. 10, 2010.
The dollar also rallied against most other currencies.
The British pound fell to $1.5320 from $1.5486. The dollar rose to 76.87 Japanese yen from 76.82 yen, to 0.9551 Swiss franc from 0.9485 Swiss franc and to 1.0196 Canadian dollar from 1.0159 Canadian dollar.
The U.S. currency also gained against the Australian and New Zealand Dollar, the Norwegian Krone and the Brazilian real.