"Since this is an interest rate-driven market, a currency of the region or country with an early rate hike expectation tends to be bought," said Yoshiko Takayasu, manager of FX sales at Royal Bank of Canada in Tokyo.

"This euro-buying trend could continue, although Moody's downgrade of Greek debt reminds us that sovereign debt problems in Southern European countries are smoldering," Takayasu told Dow Jones Newswires. The dollar sank to a four-month low against the euro Friday as traders bet on the European Central Bank raising interest rates next month. The yen was supported overnight by purchases by investors seeking safe-haven assets amid continuing turmoil in the Middle East and North Africa, dealers said. Crude oil prices eased on Tuesday after surging on Monday and heightening fears for global growth as traders fretted about escalating clashes in Libya between forces loyal to leader Moamer Qadhafi and rebels seeking to end his four-decade rule. The benchmark WTI futures contract has gained more than 20 percent in the past two weeks. On Monday it reached an intraday peak of $106.95, the highest mark since September 26, 2008. The higher oil prices battered global stock markets on Monday. But the Tokyo market stabilised Tuesday, with the benchmark Nikkei stock average staging a modest rebound. The dollar was broadly lower against other Asian currencies. The greenback fell to Sg$1.2661 from 1.2664 on Monday, to 1,116.65 Korean won from 1,119.60 and to Tw$29.34 from 29.40. It also dipped to 30.40 Thai baht from 30.46, to 8,782.50 Indonesian rupiah from 8,787.00 and to 43.33 Philippine pesos from 43.35.