The U.S. dollar weakened against the yen after the Federal Reserve released the minutes from its January meeting.
The dollar was last at 113.979 , recovering from a low of 113.37 yen struck early in the London session.
Meanwhile, the low-yielding euro extended slight gains against the dollar following the release of the minutes from the Fed's January meeting. It was last 0.19 percent lower at $1.1147.
The Mexican peso bounced further Wednesday after the Bank of Mexico raised its overnight interest rate to 3.75 percent, according to The Wall Street Journal.
The currency rose as much as 5 percent. The U.S. dollar was last down 3.29 percent against the peso.
The move came after reports that Mexico's central bank intervened directly in the forex market, as part of an aggressive new program. Two central bank sources said on the major policy shift was to support the peso, which plunged to fresh lows in recent weeks.
The peso is currently down about 6.5 percent against the dollar year-to-date.
"We are calling the banks to ask them for prices directly and selling them dollars to the financial institutions that give us a price," a central bank source told Reuters. "It is through phone calls to brokers that we are selling dollars to the market."
Mexico is committed to a freely-floating exchange rate and usually refrains from opting for more direct forms of intervention used by other emerging market economies.
Meanwhile, the yen gave up gains on Wednesday as oil prices and stock markets in Europe ticked higher, removing some of the appeal of the safe-haven Japanese currency.
Earlier, the yen had strengthened as Asian stock markets fell and oil prices slipped. In addition, China fixed a softer mid-point for the onshore yuan, a factor that weighed on riskier emerging market currencies and growth-linked currencies like the Australian dollar.
"We expect the dollar to trade between 112-114 yen, with the market cautious about driving it towards 110 yen, as that could spark off talk of intervention by the Japanese authorities," said Yujiro Goto, a currency strategist at Nomura.
The dollar tumbled below 111 yen last week, a 16-month low, after stocks and commodities plunged and expectations faded for another interest rate increase by the Federal Reserve. It rebounded as risk aversion subsided but remained vulnerable to swings in oil prices.
Oil prices rose as efforts to freeze production levels and ease a global glut turned to Iran, after a lackluster response to Tuesday's deal between Saudi Arabia and Russia. That rise in oil helped European stock markets, although risk sentiment was at best fragile amid concern global growth was slowing.
Nomura's Goto said risk sentiment would dictate direction for now, and traders would be watching U.S. housing and industrial production data and the minutes of the Fed's January policy meeting later in the day for cues.
Over the next month, though, a focal point for the dollar against the yen is the possibility of more monetary stimulus by the Bank of Japan, said Tan Teck Leng, FX strategist for UBS's Wealth Management in Singapore.
"The very reason why they decided to adopt negative rates in January, when dollar/yen was at 118, is because they wanted to encourage wage growth in 'shunto' taking place this month and next month," Tan said, referring to wage negotiations in Japan.
If the dollar is stuck near current levels against the yen by the time of the BoJ's policy meeting on March 14-15, the central bank might adopt further stimulus, Tan said.
The sterling edged up from a two-week low against the dollar after mixed data from the UK labor market showed wage growth slowing but the number of people in employment reaching a record high.