The dollar gave up most of its gains and riskier currencies recovered today as investors waited for US election results amid growing hopes that the worst of the volatility related to the event has passed.
President Donald Trump won in the key battleground states of Florida, Ohio and Texas.
But the contest will not be decided until a handful of states finish vote counts in the next hours or days.
The dollar rose as much as 1.2% overnight to hit more than one-month highs versus its rivals as early results indicated a tight race, surprising many who had bet on a decisive win for Democrat Joe Biden.
Riskier currencies such as the yuan and Australian dollar fell more than 1% each.
But the greenback lost some ground this afternoon and riskier currencies recovered, with the yuan hitting a 13-day high, as investors unwound some of those extreme positions.
"We have not so far seen big risk-off moves so I would think that probably that's the template for how things will evolve here," said Jonathan Davies, head of currency strategy at UBS.
"So even if we’re getting more indications that it’s going to be drawn out, the experience so far is not suggesting that we’re going to see huge FX volatility and huge dollar strength," he added.
John Goldie, an FX dealer at Argentex, said that the uncertainty about the result left markets in wait-and-see mode.
The dollar was up around 0.2% on the day versus a basket of currencies while the euro-dollar rate had flattened for the day, at $1.173.
A Biden victory had been expected to boost prospects for a large US fiscal aid package and lessen trade war tensions, causing the dollar to weaken sharply. It fell to a one-week low yesterday on expectations of a Biden win.
An uncertain election result heightens the risk of a contested outcome, which could include lengthy legal battles, prompting investors to seek safer assets.