Most Asian currencies were in positive territory on Tuesday but sentiment remained fragile as investors reassessed risks to global economic growth, while the baht slipped after poor data.
Global markets recoiled on Monday in the wake of an inversion in the U.S. Treasury yield curve, which has signalled a recession in the past.
The U.S. dollar rebounded modestly against the yen on Tuesday as Treasury yields pulled back from 15-month lows.
While regional currencies saw marginal gains, ING cited several reasons for further optimism.
In a note, ING Chief Economist for Asia-Pacific Robert Carnell cited a dollar off its highs for the year, the U.S. Federal Reserve's dovish shift in policy, and the "moderately positive" outlook for talks to end a U.S.-China trade war.
South Korea's won was the best performer, up 0.2 percent to 1,132 per dollar.
India's rupee strengthened to 68.815 per dollar, on track for its best month of gains since November last year.
Mizuho Bank said in a note it expected India's current account deficit for the fourth quarter due this week to decline significantly, reflecting a sharp drop in crude oil prices since late last year.
While a decline in the deficit could support the rupee, Mizuho said oil prices have since bounced off their lows and are trending upward, which would limit a sustained deficit reduction.
Elsewhere, Indonesia's rupiah and the Philippine peso gained 0.1 percent each.
BAHT GIVES UP MARGINAL GAINS AFTER DATA
The Thai baht weakened 0.2 percent to 31.63, after factory output data for February unexpectedly dropped 1.6 percent, compared to a Reuters poll forecasting a 0.5 percent rise.
The unit, which gained on Monday, was thrown into disarray after two opposition parties alleged cheating in the country's first election since a military coup in 2014.
The results remained unclear after the Election Commission said the winners of the remaining 150 lower house seats may be announced only on Friday, while a final announcement is expected on May 9.
"Yesterday's inconclusive Thai election results are likely to remain a focus while we await the apportioning of the 150 party seats," ING said.
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