China's yuan tumbled on Tuesday and the safe-haven Japanese yen rallied as the spread of a pneumonia-like virus in China dampened risk appetite.
China reported a fourth death from a new coronavirus as the number of cases continued to rise. US officials also confirmed the first US case of the virus on Tuesday.
Global stocks fell as the outbreak rekindled memories of the severe acute respiratory syndrome (SARS) in 2002-2003, another coronavirus which broke out in China and killed nearly 800 people in a global pandemic.
"You've got a stronger yen, a stronger Swiss franc and risk aversion is setting in across everything," said Kit Juckes, an analyst at Societe Generale.
The dollar was last up 0.60% against the offshore yuan at 6.9073 per dollar.
Currencies linked to Chinese trade and tourism also dropped. The Australian dollar fell to its lowest in over a month at $0.6842.
The dollar weakened 0.35% against the safe-haven Japanese yen to 109.79.
The Bank of Japan also earlier nudged up its economic growth forecasts and was cautiously optimistic about the global outlook, though it said ongoing risks meant it was far too soon to consider scaling down its massive stimulus program.
The euro erased earlier gains against the dollar that were sparked by better-than-expected data in the region.
A survey from Germany's ZEW research institute showed that the mood among German investors brightened far more than expected in January.
The single currency was also earlier supported by expectations that the European Central Bank will offer a brighter view of the economy when it meets on Thursday.
"We could see a little bit more cautious optimism there. That's getting people a little bit more excited about the euro," said Mazen Issa, senior FX strategist at TD Securities in New York.
The euro was last down 0.03% at $1.1091, after earlier rising to $1.1118.
Sterling benefited from news that Britain's economy created jobs at its fastest rate in nearly a year in the three months to November, potentially undermining the case for a Bank of England interest rate cut next week.
The pound was last up 0.34% at $1.3053.