The Bloomberg Dollar Index fell for a fourth consecutive day, even as unexpectedly strong US nonfarm payrolls data reduced market expectations for Federal Reserve interest rate cuts. The Australian dollar and the Japanese yen led gains among G-10 currencies.

Following the release of the jobs report, the Bloomberg Dollar Index initially rose by 0.3%, but it erased all gains during early New York trading and ended Wednesday's session with a decline of less than 0.1%.

US nonfarm payrolls increased in January at the fastest pace in over a year, while the unemployment rate unexpectedly declined. Traders have now fully priced in a delay in the timing of the Fed's next rate cut, shifting expectations from June to July.

A Federal Reserve Bank of Kansas City official stated that interest rates need to remain at a moderately restrictive level to curb inflation.

"Despite the strong nonfarm payrolls figures, the foreign exchange market appears to be reverting to momentum-driven short positions on the US dollar," said a strategist.

He added that this momentum trading suggests the dollar faces pressure against currencies such as the Japanese yen and the Australian dollar.

The USD/JPY pair fell as much as 1.2%, hitting an intraday low of 152.56, before paring some losses. The pair recorded a three-day losing streak, its longest since January 27.

EUR/USD declined 0.2% to 1.1870, marking a second consecutive day of losses. GBP/USD fell less than 0.2% to 1.3619.

AUD/USD rose 0.71% to 0.7125, after a Reserve Bank of Australia official commented that current inflation levels remain too high.