The yen struggled across the board on Friday after posting gains this week, weighed by warnings overnight by the Japanese finance minister of possible intervention to weaken the currency.
Gains in global stock markets and oil prices also bolstered the market's appetite for risk, diminishing the appeal of the safe-haven yen.
The yen had surged as much as 2 percent against the dollar on Thursday. Japanese Finance Minister Taro Aso responded early Friday by warning that rapid currency moves were "undesirable," that the yen's moves were "one-sided" and that Japan would take steps as needed.
That is language that Tokyo has used in the past to flag intervention. The yen has rallied to 17-month highs against the dollar, and investors have thus far expected that Japanese policy makers will hold fire on a rate decision at least until after next week's G20 meetings in Washington.
Shaun Osborne, chief FX strategist, at Scotiabank in Toronto said Aso's remarks prompted "some yen long liquidation but the reality is, we feel, that dollar/yen buying off the low yesterday in the North American session set the stage for a modest correction higher in the market."
"We still rather think that BOJ (Bank of Japan) intervention risks are low at this point," Osborne added.
In afternoon trading, the dollar rose 0.1 percent against the yen to 108.37 . This week, the dollar has fallen 2.8 percent, its worst weekly performance since mid-February.
A Reuters poll of strategists released on Thursday showed that the broader dollar rally that began in mid-2014 has nearly run its course and will only pick up slightly over the coming year.
The dollar fell 0.2 percent against the euro to $1.1394.
On Thursday, Federal Reserve Chair Janet Yellen said the Fed was on course to tighten rates gradually, which gave the dollar some relief.
Yellen's statement last week that the Fed should proceed cautiously in light of looming global risks to the U.S. economy has been at the heart of sharp falls over the past 10 days for the dollar against the euro and yen.
Both the euro and yen have acted as safe havens as investors have bought them back to reverse previous purchases into higher-yielding assets that were funded by these two low-yielding currencies.