The greenback reversed previous session's losses, rallying sharply against the euro by over two big figures to 1.4111 and the sterling by nearly four big figures at 1.6244. US equities bourses pulled back further with the Dow Jones and Nasdaq sliding by over 1.2%, while the S&P 500 lost over 1.8%.

With markets eagerly anticipating the May US labor report due out on Friday, the May ADP private-sector payrolls were worst-than-expected, posting a loss of 532k jobs and exceeding expectations for a loss of 520k jobs from 491 private sector jobs lost previously. April durable goods orders increased by 1.7%, albeit less than the 1.9% increase from March, while factory orders improved by 0.7% from 0.9%. The May non-manufacturing ISM report improved to 44 versus 43.7 a month earlier, remaining beneath the key 50-level though.

Data slated for release on Thursday include weekly jobless claims, Q1 labor costs and non-farm productivity. The key reports will be released on Friday, consisting of the May unemployment rate, which is seen creeping up to 9.2% and the non-farm payrolls reading, expected reveal a 520k job loss from 539k loss of jobs a month earlier.

Euro Tumbles toward 1.41

The euro relinquished all of Tuesday's gains versus the dollar, plunging to 1.4111 in the New York session. The economic reports released from the Eurozone overnight were mixed. Germany's May services PMI improved by less than expected, increasing to 45.2 from 43.8, albeit less than estimates for an increase to 46.0. The Eurozone May services PMI edged higher to 44.8 from 43.8 in April, while the composite PMI improved to 44.0 from 41.1 a month earlier.

Meanwhile, the revised Q1 Eurozone GDP figure was on par with expectations, revealing a contraction of 2.5% from 1.6% on a quarterly basis. The annualized GDP declined by 4.6%, worst than expectations for a decline of 4.4% from a 3.1% in the previous year.

In the coming session, traders will scrutinize April retail sales data, which are seen reversing the March decline of 0.6%, increasing by 0.2% from the previous month while improving to -3.2% compared with -4.2% a year earlier. The key highlight will be the ECB monetary policy announcement at 7:45 AM. The Bank is not expected to change policy, holding rates steady at 1.0%. The subsequent press conference by ECB President Trichet will be interpreted for clues on whether additional policy easing can be expected over the coming months.