The euro fell against the dollar as European Commission President Jose Barroso said the region is facing a “truly systemic crisis.”

The 17-nation currency pared declines from a five-week low after the European Central Bank was said to be buying Spanish and Italian government bonds, narrowing their yield gap over benchmark German bunds. The pound fell for a third day against the dollar as U.K. unemployment increased and joblessness among young people climbed above 1 million for the first time since at least 1992. The Dollar Index gained for a third day as European stocks fell, boosting demand for the U.S. currency as a haven.

“Each day that goes by the situation is getting worse, and it's inevitable under those circumstances that the currency comes under pressure,” said Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “There's unbelievably difficult decisions that lie ahead for Europe in terms of resolving this crisis.”