The dollar hovered near a 14-year low against the pound and a 20-month low versus the euro. The U.S. currency suffered from expectations a weakening economy will prompt the Federal Reserve to cut interest rates next year.
The yen briefly dipped against the dollar after data showed Japanese core consumer prices unexpectedly slowed in October to just 0.1 percent from a year ago, raising more doubts about how quickly the Bank of Japan can lift rates.
But the pressure on the dollar against the other major currencies was too great and it fell again against the yen.
"The dollar overall is very weak," said a trader at a European securities house in Tokyo.
With the pace of core inflation in Japan so tepid, analysts said the BOJ may have a tough time raising rates as many had hoped at this month's policy meeting.
The BOJ's quarterly Tankan report on business sentiment, due on Dec. 15, could be a major factor for the BOJ decision.
"The slow rise in the CPI is an argument against an interest rate hike by the Bank of Japan," said Takumi Tsunoda, an economist at Shinkin Central Bank Research Institute.
The dollar fell to 115.60 yen from near 115.80 yen in late New York trade the previous day, after hitting 15.88 yen just after the CPI release.
The euro slipped to 153.25 yen from near 153.40 yen late on Thursday.
The euro edged up to $1.3255 against the dollar and was near a 20-month high of $1.3276.
Sterling traded near $1.9675 after reaching $1.9700 the previous session, the strongest since September 1992.
The dollar has taken a big hit as worries about the U.S. economy and the outlook for rates have coincided with increasing confidence in the strength of euro zone growth and building
expectations for the European Central Bank to keep raising rates.
The ECB is widely expected to lift rates from 3.25 percent at a policy meeting next week and likely next year, while a Reuters poll showed that economists see a 40 percent chance of a Bank of England rate increase to 5.25 percent in February.
So far, Fed officials including Chairman Ben Bernanke have indicated they remain worried about inflation and won’t cut rates soon.
The Institute for Supply Management's November index of manufacturing activity, seen as a key bellwether of the overall economy's health, will be released at 1500 GMT and is expected
to show a rise to 51.5 from 51.2 the previous month.
The data comes after a survey of U.S. Midwest business activity showed the first contraction in 3-1/2 years in November, which some economists said reflected the troubles of
the auto industry more than the broader industrial sector.