Commodity-linked currencies, including the Australian and Canadian dollars, rose on Wednesday as crude oil prices stabilised, dimming the allure of the safe-haven yen.
The US dollar also recovered lost ground. The Chinese yuan fell to a three-week low against the greenback, hurt in part by expectations of a major currency transaction following news of $43 billion bid by China's state-owned ChemChina for Swiss seeds and pesticides group Syngenta.
The acquisition will be the largest ever overseas by a Chinese firm.
Traders are also speculating about Chinese foreign exchange reserves data likely to be released soon. Another big drop could increase bets on further depreciation in the yuan, keeping the currency under pressure.
Amongst more actively traded currencies, the yen gained for most of the Asian session as oil prices fell, hitting sentiment in stock markets and bringing investors' focus back to global growth woes. But once oil reversed its slide, the yen started to give back ground.
The dollar was trading steady at 120 yen, below a six-week high of 121.70 yen hit on Friday after the Bank of Japan surprised the markets by cutting one of its main interest rates below zero.
"Risk sentiment is pretty fragile, so we are seeing yen being supported," said Petr Krpata, currency strategist at ING. "We believe that dollar/yen is heading towards the top of its range with our models suggesting the dollar is overvalued."
Among commodity-linked currencies, the Australian dollar was up 0.3 per cent at $0.7062, and the Canadian dollar strengthened to C$1.4030 against its US counterpart.
The dollar index was flat against a backdrop of falling 10-year US Treasury yields. The yield fell to 1.828 percent at one point on Wednesday, the lowest since April 2015.
Concerns about slowing US economic growth and doubts about how much the Federal Reserve can raise rates this year also kept the dollar in check.
Traders get two snapshots of the US labour market this week: Wednesday's ADP private sector report followed by non-farm payrolls on Friday. Markets are anticipating slower private sector jobs growth, with risks skewed to the downside for the payrolls data too.
Analysts say even if payrolls data on Friday is robust, unless wage inflation is picking up, markets will remain cautious about rate hike expectations.
"Fed central bankers themselves (do not) know yet when the next rate step will come," said Esther Reichelt, currency strategist at Commerzbank.