If the U.K. voted to exit the EU, currency traders would likely dump the pound and send funds into the dollar, FX pros said.
The dollar was broadly weaker on Wednesday as risk appetite returned to markets.
Sterling and the euro rose on the last day before Britain's referendum on EU membership, the pound trading just off its highest this year.
The dollar tumbled on as sterling surged more than 2 percent and the euro jumped after opinion polls swung in favor of remain.
Sterling rose as traders evaluated whether the killing of MP Jo Cox may alter the balance of opinion on Brexit.
Sterling rallied from a two-month low against the euro, extending gains after British police said British lawmaker Jo Cox died.
The dollar added to earlier losses on Wednesday after the Federal Reserve left interest rates unchanged, as was widely expected.
The yen surged to its strongest level against the euro in more than three years on Tuesday as the chances of UK voting next week to leave the EU grew.
The safe-haven yen firmed broadly on Monday, hitting a three-year peak against the euro and sterling and a six-week high versus the dollar.
Sterling fell to a two-month low against the U.S. dollar on Monday as concerns grew about the threat of the U.K. voting to leave the EU in 10 days' time.
The yen and Swiss franc rose as oil prices slid and bank shares led global equity markets lower, stoking a fresh wave of bids for low-risk assets.
A broad decline in commodity and stock prices in major world markets raised the yen on Thursday.
The dollar hit a five-week trough on Wednesday, hurt by waning expectations that the Federal Reserve will raise interest rates anytime soon.
The Australian dollar strengthened on Tuesday after the Reserve Bank of Australia kept interest rates on hold.
The dollar hit a session low against a basket of currencies as Janet Yellen delivered prepared remarks about the U.S. economy.
The dollar fell to the lowest level in three weeks on Friday after the U.S. jobs report came in far below expectations.
The dollar fell to its lowest against the yen in more than two weeks.
The U.S. dollar hit its lowest level in two weeks against the yen after Japan delayed a sales tax hike for longer than expected.
Investors received a reality check this week after a poll on the upcoming referendum highlighted that the vote might just be closer than many were thinking.
The dollar was mostly flat against a basket of major currencies after U.S. data failed to support expectations for a June or July Fed hike.