The dollar is approaching its historical low versus the euro Wednesday morning, after broadly selling off overnight on strong euro-zone data and another record high for oil, which topped $131 a barrel.

The dollar fell to almost a four-week low against the euro and Swiss franc.

It also fell against the yen with growing risk aversion on fears that inflation will hit hard in the U.S. too, with oil prices so high.

Wednesday, the euro was at $1.5767 from $1.5665 late Tuesday, while the dollar was at 103.35 yen from 103.64 yen. The U.K. pound was at $1.9664 from $1.9682, and the dollar bought 1.0301 Swiss francs from 1.0363 francs.

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Germany's May Ifo business sentiment index rose to 103.5, beating economists' expectations of 101.9. It shows the euro zone's largest member is confident in its strength against a global liquidity crunch, high oil prices and a strong euro, analysts said Wednesday.

Nymex light, sweet crude futures breached $130 a barrel for the first time on record in London trading and ICE Brent crude oil front-month futures traded above $129 a barrel, another record. That's elevated inflation concerns in the euro zone and U.S., with analysts forecasting that a continued surge will keep the European Central Bank bullish, and therefore the euro at an interest rate advantage against the dollar.

The dollar has declined to record lows against the euro in large part due to the Federal Reserve's recent interest rate cuts, which have given the euro a two percentage point yield advantage to the dollar.

Amplifying the issue, the Secretary General for the Organization of Petroleum Exporting Countries said late Tuesday during a meeting with Venezuela's President Hugo Chavez that oil markets are well supplied and that crude inventories remain "very high."

According to a statement issued by the government, he said: "Prices have risen substantially because of speculative problems, because of the devaluation of the dollar and global inflation.... This has generated a situation in which financial actors are migrating to what are called futures contracts, which are considered safer than other investments."

As a result, foreign exchange momentum traders are re-establishing short positions in the dollar, analysts say.

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