Risk appetite rose on reports Hong Kong leader Carrie Lam would announce the formal withdrawal of an extradition bill that triggered months of unrest.
In Italy, the 5-Star Movement approved a coalition deal with the Democratic Party, paving the way for a new government, while lawmakers opposed to a no-deal Brexit gained the upper hand in Britain, triggering a global equities rally. Edward Moya, senior market analyst at OANDA in New York, said the dollar's weakness was triggered by this "risk-on move in Hong Kong that gave Hong Kong equities one of the best moves in a few years." That has boosted appetite for riskier currencies that have generally higher yields, he added.
In mid-morning trading, the dollar was last down 0.4% against a basket of major currencies, at 98.656.
The yen fell against the dollar, which rose 0.3% to 106.27 yen. It also declined against the euro, which gained 0.7% to 117.045 yen. The euro also rose 0.4% versus the dollar to $1.1011 after comments from Christine Lagarde, who will likely be the European Central Bank's next president, introduced some doubt over the scale of an ECB stimulus package expected next week.
The dollar's weakness helped China's offshore yuan pull away further from record lows plumbed earlier this week. The Chinese currency was last up 0.4% against the dollar, which fell to 7.1511 yuan. The British pound recovered Tuesday's losses, when it hit a three-year low, after the latest parliamentary attempt to stop a no-deal Brexit took a step forward. Sterling bounced 0.9% to $1.2185, and against the euro it rallied 0.4% to 90.45 pence.