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 The dollar sank to its lowest level in a month while the euro, yen, Aussie and kiwi rallied hard in Asian trading on Wednesday after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran. 

The yen strengthened 0.7% against the greenback to 158.50 per dollar. The euro was up 0.7% at $1.1677, while the British pound appreciated 0.8% to $1.3403.

The Australian dollar climbed 1.2% to $0.7063 and its New Zealand counterpart jumped 1.1% to $0.5795.

Trump had earlier threatened widespread attacks on Iran's civilian infrastructure, drawing international condemnation after issuing an extraordinary warning that "a whole civilization will die tonight" if his demands were not met.

Investors' risk appetite rapidly returned after the ceasefire announcement, less than two hours before Trump's deadline for Tehran to reopen the Strait of Hormuz would have expired.

If the Strait is reopened, "we could be able to consolidate the risk-on rally that we're seeing,"  said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

"But a lot has to happen in the next 14 days," he said, adding that currencies would be vulnerable to a retracement of their recent moves in the interim. "Markets still need to proceed with a degree of scepticism."

The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, weakened for a third consecutive day to 98.943, the lowest since March 11.

Cryptocurrencies rallied, with bitcoin advancing 3.2% to $71,514.03, and ether climbing 5.7% to $2,235.35.