The U.S. dollar slid Thursday after President Donald Trump said his warning to to bring "fire and fury" on North Korea may not have been tough enough.
The dollar index, which tracks the greenback against six rival currencies, was down 0.16 percent at 93.40. The dollar also continued its slide against against the yen, falling as much as 0.81 percent. It was last down 0.04 percent at 109.16 yen.
The euro, meanwhile, was flat after initially surging 0.11 percent following Trump's comments. It remains the best-performing G10 currency so far this year with gains of more than 11 percent against the dollar.
Earlier in the day, the dollar slipped to an eight-week low against the Japanese yen, as continuing tensions between the United States and North Korea led investors to look for assets viewed as less risky.
"The yen is the big story really. Risk aversion is still very much a concern for markets," said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.
The Swiss franc and the yen had notched up impressive gains against the dollar on Wednesday after U.S. President Donald Trump warned North Korea that it would face "fire and fury" if it threatened the United States.
That prompted North Korea to say it was considering firing missiles near Guam, a U.S. Pacific island territory.
The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus, and it being the world's biggest creditor nation, there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty.
The dollar weakened after news that U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.
"It reinforces market concerns that inflation is perhaps just not picking up in the way the Fed had been expecting," said Osborne.
On Thursday, New York Fed President William Dudley said he expects sluggish U.S. inflation to rise over the next several months while the hot labor market gets even hotter.
Sterling touched a three-week low against the dollar as mixed output and trade data did little to alter investors' downbeat view of an economy struggling to meet Bank of England targets.