The dollar extended losses against the yen to hit a new two-month low. It was down 0.15 percent at 109.065 yen, after retreating 0.7 percent on Thursday.
The yen is perceived as a safe haven because Japan is the world’s biggest creditor country and investors there have tended to repatriate funds in times of crisis.
“Given the speculative flows positioning for possible yen repatriation, we could see the psychologically significant 109.00 level give way,” Stephen Innes, head of Asia Pacific trading at OANDA, wrote in a note.
Low U.S. Treasury yields are also weighing on the dollar. The yield on the benchmark 10-year Treasury yields fell as low as 2.197 percent overnight, their lowest level since June 28. They were at 2.201 percent on Friday.
The dollar pulled back 0.1 percent to $0.9635 Swiss francs on Friday, after dropping as much as 1.2 percent to a two-week low overnight.