The U.S. hit a 15-day low against the yen on Thursday as traders used the quiet holiday period to take profits on the dollar's recent gains, while a drop in U.S. Treasury yields on waning risk appetite reduced the greenback's appeal.
The dollar was last down 0.55 percent against the yen at 116.60 yen after falling as much as 0.9 percent in early trading to 116.23 yen, its lowest level since Dec. 14. The greenback had gained 11.5 percent against the Japanese currency between the Nov. 8 U.S. election and Wednesday.
Those gains came partly as U.S. Treasury yields surged to multi-month and multi-year peaks on a faster projected pace of Federal Reserve interest rate increases next year and expectations that U.S. President-elect Donald Trump's policies would boost inflation.
Yields on most U.S. Treasuries hit at least two-week lows on Thursday, however, halting the dollar's gains by reducing the appeal of higher-yielding U.S. assets compared to those of other countries.
"It's profit-taking," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. "The strong dollar that we've seen since the start of November seems to be in a toppish environment." He also noted that trading remained thin during the holiday period.
The euro was last up 0.76 percent against the dollar at $1.0486 after touching a one-week high of $1.0480 in early trading, but was still on track to fall 3.6 percent against the dollar this year.
Data on Wednesday showing contracts to buy previously owned U.S. homes fell in November to their lowest level in nearly a year contributed to the dollar's weakness, said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
"The dollar fall was mostly due to renewed doubts about the U.S. recovery after pending home sales dropped in November. This is where the risk-off reversal started," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
The , which measures the greenback against a basket of six major currencies, was last down 0.62 percent at 102.66 after touching 103.630 on Wednesday and flirting with a 14-year high of 103.650 touched on Dec. 20.
The index has gained 4.2 percent this year, with all those gains having come after the November U.S. election.
Sterling was last up 0.01 percent against the dollar at $1.2225 after touching a two-month low of $1.2201 on Wednesday.