Federal Reserve Chair Jerome Powell said on Friday the central bank will "act as appropriate", and investors are pricing in a 0.25 percentage point cut at its next scheduled meeting on March 17-18. The dollar was 0.2% weaker.
Earlier, money had poured into US Treasuries, sending the implied yield on US 10-Year Treasury futures below 1% for the first time though it has since recovered.
The euro was up 0.2%, while the yen last stood 0.2% weaker.
Offering the first glimpse into the impact of the virus outbreak in China, factory activity contracted at the fastest pace on record last month.
China's yuan, however, gained 0.3%, with some market participants saying the contraction was unlikely to get worse as production and supply slowly get back to normal.
"Unlike a demand-driven shock during the global financial crisis, when the market was unsure about the trajectory of the recovery, it is almost certain that February will mark the bottom for this year," OCBC said in a note, citing easing restrictions on supply-side factors.
With markets now looking to central banks for a response, Julian Wee, an investment strategist at Credit Suisse, said lower risk aversion was seeing long positions on the dollar reduce.
The South Korean won strengthened 1.3% to its highest level against the dollar in nearly two weeks.
A private survey showed factory activity shrank faster in February, as export orders contracted at the quickest pace in more than six years.
Indonesia's rupiah fell 0.5% against the dollar, after posting its biggest weekly loss since 2008 amid foreign money outflows.
The central bank said it was adopting "triple intervention" - its term for operations in the domestic non-deliverable forward, spot foreign exchange and bond markets, while the head of the Financial Services Authority urged investors to remain calm amid the outflows.
Yields on Indonesia's 10-year bonds ticked higher to 7.047% from 6.966% at the open.
Malaysia's ringgit advanced 0.3%, with market participants keeping a close watch on political developments as Mahathir Mohamad promised to seek a vote in parliament to challenge Muhyiddin Yassin's assent to prime minister on Sunday.
The Thai baht strengthened 0.7%, while the Philippine peso was up 0.3%.