The dollar sank to a five-week low below 114 yen on Thursday and was on course for its worst week since November, hit by a loss of confidence in the U.S. reflation trade which has dominated markets since Donald Trump's election.
Speculators had driven the dollar higher on Wednesday in expectation that Trump's first news conference since his victory on Nov. 8 would give more detail on new fiscal spending and tax measures to repatriate U.S. corporate capital held overseas.
Instead, the event was dominated by debate over Russian hacking and unsubstantiated claims that he had in the past been caught in a compromising position in Moscow. U.S. Treasury yields fell to their lowest since November in early deals in Europe on Friday.
"For the moment I would stop short of drawing broader conclusions. I think he will still implement his policy platform," said Lee Hardman, a currency economist with Japan's MUFG in London.
"But he has failed to provide a fresh catalyst for the reflation trade. That has led to the positions on the dollar continuing to correct this morning."
The fell as low as 113.97 yen, its weakest since Dec. 8, and down 1.2 percent on the day.
The dollar index, which tracks the U.S. currency against a basket of six major counterparts, fell another 0.40 percent to 101.37. It had risen to a one-week high on Wednesday.
The euro gained 0.4 percent to $1.0622 after skidding to a 14-year low of $1.0340 last week.
"There's 'Good Trump' and 'Bad Trump' for the markets. Will 'Good Trump' return before the inauguration?" said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.
While some investors who missed out on the dollar's post-election rally were still looking to buy on dips, others were seeking to pare their long dollar positions in case the coming reality of Trump's administration fail to live up to expectations, market participants said.
But there has also been a broadly stronger tone to commodities-linked currencies like the Canadian and New Zealand dollars. The former hit its highest since October in early trade in Europe and the kiwi gained more than 1 percent.