The dollar fell against the euro Wednesday after a report showed the U.S. private sector shed more jobs than expected in June, which may diminish the likelihood of a rate increase by the Federal Reserve.

The dollar's recent declines against the other major currencies are set to reach the final whistle and greenback sellers will have to retreat to the sidelines, David Darst, chief investment strategist of Morgan Stanley Global Wealth Management Group told CNBC Tuesday.

The yen rose broadly Tuesday, benefiting from mounting risk aversion as heightened fears of further losses in the banking sector and global stocks prompted investors to sell dollars.

Euro zone inflation jumped to a record high of 4.0 percent in June, cementing expectations the European Central Bank will raise interest rates this week despite slowing economic growth.

U.S. Treasury Secretary Henry Paulson said on Monday he believes in a strong U.S. dollar and that U.S officials were working to resolve the country's economic problems, including regulatory mistakes that led to excesses in the mortgage and banking sectors.

The U.S. dollar rebounded against the euro on Monday as traders bought back the U.S. currency as the second quarter ends, but losses in the euro may be limited ahead of an expected rate hike by the ECB this week.

The Federal Reserve should let the big investment banks go bust if they made unwise investment decisions, and investors should take refuge into gold, said Marc Faber, editor and publisher of "The Gloom, Boom & Doom Report."

The global economy will struggle more than people now think, as the credit crunch spreads beyond housing and financials, Gerald Hassell, Bank of New York Mellon president, told "Squawk Box Europe" Friday.

The dollar extended declines against the yen and fell versus the euro, after U.S. stocks accelerated their losses.

The dollar fell broadly Thursday, nearing a three-week low against the euro, after the Federal Reserve held interest rates at 2 percent, dashing expectations of an imminent rate hike.

Inflation risks have increased in the medium term and the European Central Bank stands ready to counter inflationary pressures, ECB President Jean-Claude Trichet told the EU Parliament on Wednesday.

Japan's exports in May rose more than expected from a year earlier, in a sign that growth in Asia and other developing countries is continuing to offset falling U.S. demand -- at least for now.

The dollar fell to two-week lows versus the euro on Wednesday, as selling accelerated in the aftermath of the Federal Reserve's decision to hold key interest rates steady at 2.0 percent.

The dollar extended losses against the euro on Tuesday, tumbling to a session low after data showed U.S. consumer confidence fell to a near 16-year trough.

The euro fell after high energy costs soured German business sentiment and the euro zone's manufacturing and services sectors contracted last month, denting the case for higher euro zone interest rates.