Overnight surges left the euro and pound sitting pretty in early Asia helped by good UK jobs data and a general improvement in investor sentiment on solid US retail sales and hopes of easing lockdowns in China.

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The European common currency touched $1.05 in early Asia trade, after rising 1.1 percent overnight, its largest day of percentage gains since March. Sterling touched $1.25 after a 1.4 percent overnight rally, its best day since late 2020, also helped by data that showed Britain's jobless rate hit a 48-year low.

These gains pushed the dollar index, which measures the greenback against six peers, as low as 103.18 in early Asia, its lowest in nearly two weeks.

"The pound got a boost from the very strong jobs report yesterday, and on top of that there has been a slight improvement in the broader risk sentiment in financial markets driven by some positive news out of China on the lockdowns and strong data out of the US," said Carol Kong, currency strategist at Commonwealth Bank of Australia.

Shanghai on Tuesday achieved its long-awaited milestone of three consecutive days with no new COVID-19 cases outside quarantine zones having set out its clearest timetable yet for exiting a lockdown the day before.

US retail sales rose strongly in April as consumers bought more motor vehicles amid an improvement in supply and increased spending at restaurants.

Also reflecting the improved risk sentiment, equities jumped overnight and US benchmark Treasury yields gained, and were last at 2.98 percent. Overnight, Federal Reserve Chairman Jerome Powell said at a Wall Street Journal event on Tuesday, the Fed will "keep pushing" to tighten US monetary policy until it is clear inflation is slowing. While the dollar briefly pared its loses after Powell's remarks, it then resumed its decline.

The higher yields helped put an end to the yen's small recent recovery, as the Japanese currency is very sensitive to higher rates in the United States. The yen was last at 129.28 per dollar, little changed on the day. The Australian dollar was on the front foot, helped by the improved risk sentiment and was trading at $0.70, extending a 0.8 percent gain on Tuesday.

The Aussie was also helped by minutes from a central bank meeting published on Tuesday which hinted that the Reserve Bank of Australia will hike interest rates again in June. Cryptocurrency markets were fairly quiet. Bitcoin was barely changed at around $30,400.