The yen rallied on Tuesday after a G7 official said an earlier statement from the group was meant to signal worries about excessive moves in the yen. Canadian Finance Minister Jim Flaherty on Wednesday said the statement was a consensus effort and not meant to single out Japan.
Moreover, Bank of England Governor Mervyn King said the statement should be taken at face value and anonymous officials should not try to reinterpret it.
(Read more: Don't Overthink G-7 Communiques: Strategist)
The yen lost nearly 20 percent against the dollar between November and early February, picking up speed as Japan's new government put pressure on the Bank of Japan to ease monetary policy more aggressively to defeat deflation.
Markets were also likely to tread cautiously until the outcome of a BoJ meeting that ends Thursday, although many expect the bank to hold off any fresh easing measures until April when it will meet with a new governor at the helm.
The euro traded flat at $1.3450. Some strategists said the euro also would be largely sidelined before the G20 meeting, although it could come under pressure if euro zone gross domestic product data on Friday shows the economy contracting.
An Italian auction Wednesday morning that fetched higher yields for the first time since October weighed on the euro, analysts said.
BNY Mellon flows data showed Italian bonds have been net sold for eight consecutive sessions, while the euro has been sold for four straight days.
(Read More: G20 to Skirt Potholes as World Economy Recovers)
"The euro's resilience of late is proving to be a double-edged sword," said BNY Mellon's Shankar. "The single currency's recent appreciation is likely to be a source of worry vis-a-vis the euro zone's deteriorating export competitiveness."
The euro has retreated from a 15-month high of $1.3711 hit at the start of February. It extended losses last week when European Central Bank President Mario Draghi warned of downside risks to the euro zone growth outlook.
Among corporations, however, the view on the euro remained positive, with option strike prices on the three- to six-month tenors starting from $1.40-$1.42, said Andres Bergeron, vice president and chief corporate trader at Bank of the West in San Ramon, Calif.
Also on Wednesday, the British pound fell to multi-month lows after the Bank of England said inflation would stay higher for longer and its governor cautioned that further bond-buying to boost the weak recovery might have limited impact.
Sterling fell 0.8 percent to $1.5542.