The euro edged up on Wednesday after hitting a four-year low against the dollar on jitters over the euro zone's debt crisis, while Asian stocks were broadly steady despite a dip on Wall Street.
The yen weakened broadly after Japan's Prime Minister Yukio Hatoyama said he would resign, which fueled investor expectations that political turmoil would make the economy more dependent on the Bank of Japan's loose monetary policy.
The dollar gained just over 0.9 percent to 91.78 yen, its highest since May 20. The euro was up 0.4 percent to $1.2253 and gained 1 percent against the yen.
Japan's political turmoil is a factor for yen selling especially for non-Japanese investors. But once Hatoyama's successor is decided temporary relief will likely prompt investors to buy back the yen to the level it was beforehand, said Jun Kato, senior investment manager at Shinkin Asset Management.
I expect dollar/yen is likely to move around 90-92 in the coming few weeks.
Japan's Nikkei stock index <.N225> rebounded from early losses to rise 0.4 percent, buoyed by the yen's broad drop.
The MSCI index of Asia Pacific ex-Japan stocks <.MIAPJ0000PUS>, which has been underperforming world equity markets <.MIWD00000PUS> so far this year, were little changed, shrugging off a dip in U.S. stocks <.N> on Tuesday.
On Tuesday, the euro hit a new four-year on low after the European Central Bank warned that euro zone banks may face a new wave of losses, and U.S. stocks plunged as the government launched a criminal probe into BP's oil spill in the Gulf of Mexico.
The dollar held firm near a 15-month high on Wednesday against major currencies as investors focused on reports on the U.S. labor markets due later this week, which are expected to show a surge in employment.
Traders said euro selling pressure is likely to continue as the market grows more confident that the U.S. economy and its banking system are in much better shape than Europe's.
Spot gold fell to $1,222.56 an ounce, down 0.6 percent from a two-week high hit on Tuesday after the ECB's warnings about the threats faced by Europe's banking sector.
(Editing by Jan Dahinten)