The rose on Wednesday after Japanese Prime Minister Shinzo Abe voiced concern about the economic impact of its fall to a six-year low, adding to the sense of a halt this week in the dollar's record-breaking run since July.
The dollar slipped 0.3 percent on the day to 108.55 after the Jiji news service quoted Abe as saying he would carefully watch the impact of the yen's recent weakness on Japanese regional economies.
The prime minister's comments follow similar expressions of concerns from two of his ministers after a drop of roughly 7 percent since early August which took the to a low of 109.46 per dollar last Friday.
Much as that seems broadly part of Abe's plan to refloat the Japanese economy by spurring inflation, market players said the pace may not be so easy for policy makers to digest.
"It seems to us - and I think most people - that it's not the fact of the move, just the pace of it that Tokyo is concerned about," said a spot dealer with one large international bank in London.
"(But) it is not a surprise that we're seeing the show some resistance at the moment, given the slight pullback we've seen on the dollar in the last few days."
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Gains of about half a percent for both the New Zealand and also added to the feeling of consolidation around the U.S. currency's rally but the underlying tone remains positive.
The dollar has racked up 10 weeks of gains against a basket of currencies on the back of growing conviction among investors that the Federal Reserve will raise U.S. interest rates next year.
There have been signs of more resistance from the euro as well, but the prospect of an extended period of low growth and low inflation is expected to add to pressure for looser monetary conditions.
The dollar was down 0.1 percent against the euro at $1.2860, but held steady against the currency basket at 84.621, near a four-year high of 84.861 set on Monday.
"A lot of hedge funds were taking profits after the dollar's recent rise," foreign exchange research firm Global-info Co director, Kaneo Ogino, said.
"But other investors see an opportunity to buy the dollar on dips," he said.
Pensions
Abe has supported a policy of yet more money-printing by the Bank of Japan and it is expected to trail far behind the Fed in starting to rein in that policy, the dominant trend among major central banks since the 2008 financial crisis.
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The has also been weighed down by speculation that a forthcoming strategy review by Japan's $1.2 trillion Government Pension Investment Fund (GPIF) may result in an increase in its allocation toward overseas assets.
Abe's comments are probably aimed at trying to avoid any criticism related to the yen's weakness, Barclays Asia Pacific head of FX strategy in Singapore, Mitul Kotecha, said.
"But ultimately, I don't think the trend or the tone will change. It appears to me that Japanese officials would still prefer to see yen weakening as long as it's a gradual drop in the currency," Kotecha said.