Traders kept a close eye on sterling and the euro on Tuesday after the currencies suffered hefty losses in the previous session on uncertainty over Britain's membership in the European Union, while a rally in commodity prices boosted the Australian dollar.
The pound was last at $1.4151, having slid as far as $1.4057 - a low not seen since March 2009. It fell nearly 2%, posting its biggest one-day drop in almost six years.
Sellers took aim at the currency after London Mayor Boris Johnson, one of the country's most popular politicians, announced his support for Britain to leave the EU.
He gave the "Brexit" camp a much-needed figurehead and raised the risk that Britons will vote to exit the bloc in the June 23 referendum.
"Fears of Brexit have relegated the GBP to the bottom of the leader board," said Rodrigo Catril, FX strategist at National Australia Bank.
"The euro was also an underperformer against the USD, suggesting the market is expressing some concerns for the euro if the UK chooses to leave the European Union."
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The euro came within a hair's breadth of $1.1000 for the first time in nearly three weeks. It has since edged back to $1.1027.
The euro managed to outperform sterling, briefly rising above 78.00 pence. It was still some way off a 14-month high near 79.00 pence set earlier in the month.
Not helping the common currency, a closely watched survey showed euro zone private business activity grew at its weakest pace in over a year in February, with both service firms and manufacturers having a poor month.
"The downward surprise in the euro zone PMI data on Monday supports our economists' expectations for bold ECB action on the 10th of March," BNP Paribas analysts wrote in a note to clients.
Weakness in the euro and sterling helped lift the dollar index to its highest in around three weeks. The index last traded at 97.384, not far from the overnight high of 97.600.
Investors warmed to the Australian dollar, thanks in part to a big rally in the price of iron ore, a major export for Australia. The Aussie scaled a near two-month peak of $0.7248 and was last at $0.7227.
Spot iron ore jumped 7% to over $50 a tonne on Monday, holding out the hope of a recovery in the market.
There is no major economic data out of Asia on Tuesday.