Enhanced by positive U.K. employment figures and a general increase in market mood due to robust U.S. retail sales and anticipation of lessening lockdowns in China, the euro and the pound were favorable early in the Asian trading day.

The European common currency reached $1.0563 during Asia's early trading session after gaining 1.1% overnight, its highest percentage rise since March.

After a 1.4 percent overnight rise, sterling reached $1.2501, its most important day since late 2020, aided by figures indicating that Britain's unemployment rate reached a 48-year low.

These advances pushed the dollar index, which measures the greenback against six peers, to a two-week low of 103.18 in early Asia.

"The pound got a boost from the very strong jobs report yesterday, and on top of that there has been a slight improvement in the broader risk sentiment in financial markets driven by some positive news out of China on the lockdowns and strong data out of the U.S.," said Carol Kong, currency strategist at Commonwealth Bank of Australia.

Shanghai reached the long-awaited milestone of three consecutive days with no new COVID-19 cases outside of quarantine zones on Tuesday, one day after establishing its most apparent timeline for lifting a lockdown.

In April, U.S. retail sales grew significantly as consumers purchased more automobiles in response to improved supply and increased spending at restaurants.

In addition to overnight gains in equities, benchmark U.S. Treasury rates rose, closing at 2.9878 percent, reflecting the increased risk sentiment.

Overnight, Chairman of the Federal Reserve Jerome Powell stated at a Wall Street Journal event on Tuesday that the Fed will "keep pushing" to tighten U.S. monetary policy until it is evident that inflation is declining.

After Powell's speech, the dollar initially recovered some of its losses but resumed its drop.

The increased yields contributed to the end of the yen's recent modest gain, as the Japanese currency is susceptible to increases in U.S. interest rates. The yen ended the day at 129.28 per dollar, with slight fluctuation.

The Australian dollar traded at $0.7035 on Wednesday, extending Tuesday's 0.8 percent advance to a new high. The uptick was aided by improving risk sentiment.

The Australian dollar was also supported by the publication on Tuesday of minutes from a central bank meeting signaled that the Reserve Bank of Australia may raise interest rates again in June.

The cryptocurrency markets were relatively calm. Bitcoin's price fluctuated minimally around $30,400.