Across mainland China 2,015 new cases of coronavirus were confirmed as of Tuesday, the lowest daily rise since Jan. 30. China's senior medical adviser also said the outbreak might be over by April.
The slowdown in the number of new cases encouraged investors to resume seeking yields.
The dollar has benefited from that approach, thanks to its relatively high interest rates. For example, spreads between U.S. and German 10-year bond yields are holding at a more than two-year highs above 200 basis points.
"The steady improvement in risk appetite is helping markets, and expectations that central banks will not rush into tightening policy anytime soon is also boosting sentiment," said Manuel Oliveri, an FX strategist at Credit Agricole in London.
Against a basket of major currencies, the dollar edged 0.1pc higher at 98.77, just below a four-month high of 98.95 hit in the previous session.
The coronavirus epidemic has upended China's economy, the world's second-largest. In foreign-exchange markets, export-oriented currencies such as the Norwegian crown and Swedish crown have come under some pressure as the virus spread.
The Norwegian crown has weakened more than 5pc so far in 2020. Sweden's crown has fallen by 2.6pc.
The New Zealand dollar jumped 0.8pc to $0.6462, its biggest rise in two months, after the central bank removed the chance of a rate cut from its forward projections.
Recession fears in Europe dragged the euro to a four-month low overnight. It has since recovered to trade flat at $1.0915.