That further increased nervousness in the market already rattled by weeks of wild moves, as investors struggled to assess the economic damage caused by the coronavirus.
"This is all a combination of both the oil story and the coronavirus," said Edward Moya, senior market analyst, at OANDA in New York.
Oil prices fell 30% after Saudi Arabia pledged to slash prices and boost production following the collapse of an OPEC supply agreement.
On the coronavirus front, the number of people infected with the virus topped 110,000 across the world as the outbreak reached more countries and caused more economic damage.
As a result, currency volatility shot up.
A gauge of volatility in the euro/dollar market - the world's most-traded currency pair - shot to its highest since April 2017 as the euro surged more than 1% to its strongest since January 2019.
Dollar-yen one-month implied volatility surged to an 11-year high at more than 18% as the dollar slid to its weakest since 2016.
In hectic trade, the dollar fell as low as 101.20, its lowest in more than three years. It was last down 3.2% at 10.82 yen.
The yen was headed for its largest three-day gain since the 2008 financial crisis. It is up around 9% in a dozen trading days.
The euro rallied 1.3% to $1.1425 after earlier touching $1.1492.
The dollar index dropped to its weakest since September 2018, and was last at 95.039, down 0.5%.
The dollar also dropped 1% against the Swiss franc to 0.9280.
There were also big moves in currencies linked to oil prices.
Norway's crown tumbled to record lows. The euro added 4% against the crown to 10.857 and the dollar gained 2.8% to 9.509 crowns.
The Canadian dollar shed 1.3% against the greenback, which was up at C$1.3598.
The Australian and New Zealand dollars earlier fell nearly 2% before bouncing back.