The dollar steadied against a basket of currencies on Wednesday as calm returned to global financial markets with investors partially reversing their rush to safe haven assets and moving back into stocks.
The greenback had risen against currencies like the euro as investors sought shelter amid the rout in global equities seen at the start of the week, which was triggered by a massive decline in Wall Street shares.
The dollar index against a basket of six major currencies was mostly flat at 89.608, nudging away from a two-week peak of 90.034 set overnight.
The euro inched up 0.05 percent to $1.2384 after slipping to a two-week low of $1.2314 the previous day.
"How the dollar will fare with the recent tumult in stocks showing signs of settling down depends on which currency you are looking at," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
"Against the yen, the dollar stands to benefit as relief seen in Wall Street spills over into Asian equities. Against the euro, however, the dollar is likely to be capped, with US-German yield differentials and monetary policy thoughts to dictate direction."
The dollar was 0.2 percent lower at 109.310 yen after rising 0.5 percent overnight. It was still comfortably above the low of 108.460 reached the previous day during wild swings in global equities.
Against the yen, a perennial haven in times of risk aversion, the dollar had been put on the defensive when equities slid at the start of the week.
Wall Street shares bounced about 2 percent on Tuesday after suffering the biggest one-day sell-off in more than six years.
Focus remains on US stocks, which were the source of the latest turbulence in global markets and currencies.
The recent surge in long-term US bond yields to four-year highs had helped trigger the slide in the equity market, and while yields have pulled back from those peaks, they still remain elevated.
"The 10-year Treasury yield has nudged back ahead of today's auction. Depending on how the auction goes, US equities could face renewed pressure," said Makoto Noji, senior strategist at SMBC Nikko Securities.
Following soft demand for a $26 billion three-year sale on Tuesday, the US Treasury will auction $24 billion of 10-year government bonds later on Wednesday.
"Global stocks are expected to remain on a nervous footing going forward," Noji said.
The Australian dollar was 0.2 percent lower at $0.7889 but still some distance away from a one-month low of $0.7835 plumbed on Tuesday.
The pound nudged up 0.05 percent to $1.3961 after touching a low of $1.3838 overnight, its weakest since Jan. 19.
The Swiss franc, a perceived safe haven along with the yen, was steady at 0.9355 franc per dollar after losing 0.45 percent overnight.
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