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Germany uses Euro (€) as their currency and not many places will accept dollars, therefore it is necessary to convert your cash into the correct currency (check Oanda for up-to-date exchange rates) or head to an ATM ('Geldautomat') to withdraw euros. Day-to-day spending is usually cash-based, so make sure you keep some cash on you at all times. But don't worry, ATMs are available throughout the towns and cities and are conveniently located. More and more places accept credit cards; however do not be surprised if your card is rejected, even in a larger establishment or when paying for a larger bill.
Contact your bank prior to your trip to receive more details on additional charges or the best option in using your credit and debit cards overseas. Also make sure to ask your bank for the PIN number of your credit card in advance, as some credit card systems will require a PIN.