The U.S. currency dropped 0.4 percent to 112.72 yen, handing back its modest gains made overnight.
Adding to the jitters on Thursday was the arrest in Canada of a top executive of Chinese tech giant Huawei Technologies, fanning fears of a flare-up in tensions between China and the United States just as the two sides are supposed to be resuming trade negotiations.
"Lower Treasury yields are driving the dollar.lower against the yen. It is difficult to pinpoint how much funds investors have transferred from equities to bonds in the recent risk aversion and it is too early to call a bottom for Treasury yields," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Signals from the Federal Reserve last week that it may be nearing an end to its three-year rate hiking cycle have helped trigger the slide in Treasury yields.
The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates.
"The dollar could remain under pressure until this month's Fed meeting as long-term Treasury yields may not be able to mount a rebound until the market sees the Fed's stance on policy and the economy," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
The yen, often sought in times of market unrest, made strides against other peers as well.
The euro was little changed at $1.1340 after retreating from this week's high of $1.1419 scaled on Tuesday.
The Aussie was already on a shaky footing after shedding nearly 1 percent the previous day on weaker-than-expected third quarter Australian gross domestic product data.
The pound was a shade lower at $1.2721.
Sterling had sunk to a 17-month low of $1.2659 at one point on Tuesday after parliamentary setbacks for Prime Minister Theresa May.
(With inputs from agencies.)