During European afternoon trade, the dollar was sharply lower against the euro, with EUR/USD rallying 0.93% to hit 1.3438.
In a joint statement, the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said they had agreed to lower dollar swap rates by 0.5% to prevent a lack of liquidity in the global financial system.
The European Central Bank said the plan was aimed at reducing the credit-supply strain on households and businesses.
The surprise announcement came after the People's Bank of China said that it plans to cut banks reserve requirement ratios by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
The greenback was also lower against the pound, with GBP/USD advancing 0.51% to hit 1.5679.
Elsewhere, the greenback weakened against the yen and the Swiss franc, with USD/JPY shedding 0.34% to hit 77.63, and USD/CHF tumbling 0.77% to hit 0.9137.
Earlier Wednesday, Bank of Japan Deputy Governor Kiyohiko Nishimura said that Japanese policymakers must take resolute action if currency market moves are out of line with economic fundamentals.
In addition, the greenback was sharply lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 1.14% to hit 1.0203, AUD/USD leaping 2.13% to hit 1.0212 and NZD/USD jumping 1.62% to hit 0.7731.
In New Zealand, official data showed that building consents in New Zealand climbed 11.2% in October, after a 17.2% decline the previous month.
Elsewhere, a report showed that Australia private capital expenditures rose far more-than-expected in the third quarter, climbing 12.3% after a 6.2% increase the previous quarter.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, tumbled 0.81% to hit 78.49.
Risk appetite was also boosted after a report from payroll processing firm ADP said U.S. private sector employment rose by a seasonally adjusted 206,000 in November, blowing past expectations for an increase of 130,000.
The previous month’s figure was revised up to a gain of 130,000 from a previously reported increase of 110,000.
The increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply.
Later in the day, the U.S. was to release official data on manufacturing activity in the Chicago area and pending home sales, while euro zone finance ministers were holding a second day of talks, after agreeing on measures to expand the bloc’s bailout fund on Tuesday.