The euro rallied from nearly three-week lows against the dollar on Monday after a European Central Bank policymaker said Europe's shared currency was not overvalued at current levels.
The yen plunged against the dollar and euro after U.S. Treasury Undersecretary Lael Brainard said the United States supports Japanese efforts to end deflation and reinvigorate growth. The markets viewed her comments as a green light to sell the yen further, analysts said.
The dollar touched as high as 94.42 yen, its highest level since May 2010. It was last at 94.35, up 1.8 percent.
"This suggests that the U.S. government has no problems with yen weakness and won't support any official criticism of Japan's exchange rate policies at the G20 meeting," said Kathy Lien, managing director at BK Asset Management in New York.
Meanwhile, discussions about an overvaluation of the euro are simply a diversion from governments' task of sorting out their economies, Jens Weidmann said, resisting political pressure to weaken the currency.
He added that a currency policy aimed at weakening the euro would lead to higher inflation.
The euro, which fell against the greenback during the previous three sessions and was down 1.2 percent so far this month, was buoyed by investors seeking to buy at lower levels, but gains accelerated after Weidmann's comments.