The yen in particular has drawn steady support from a flight-to-safety bid in recent days, though moves in foreign exchange markets have been relatively orderly compared with those in equity markets.

On Wednesday, the dollar index against a basket of six key rivals was last a shade lower at 97.560, having ended the previous session with a gain of 0.1 percent.

Against the yen, the dollar fell 0.1 percent to 110.13 yen  for its fourth-day of losses against the Japanese currency and just off a near six-week low of 110.09 yen brushed earlier in the session.

Financial markets have been rattled this week by renewed tensions in U.S.-China trade relations.

That started when U.S. President Donald Trump tweeted on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent by the end of the week and would "soon" target the remaining Chinese imports with tariffs.

Top Chinese negotiator Vice Premier Liu He heads to Washington this week for talks, and some investors have seen Trump's threat as a negotiating tactic.

On the back of these trade tensions, the greenback has given up about 1.4 percent against the yen, which tends to benefit during geopolitical or financial stress as Japan is the world's biggest creditor nation, since last Friday.

Kumiko Ishikawa, senior analyst at Sony Financial Holdings, said traders' focus is now on whether the yen will strengthen past 109.70 yen per dollar, a recent high that was last hit in late March.

"A lot of focus is on whether dollar/yen will break through this level. If it breaks through it, I think there are a lot of traders who're looking to jump in to sell," said Ishikawa.

She added she believed the yen would break through that level if Trump would follow up on his threat to lift tariffs on $200 billion worth of Chinese products this week, and would complain again about the U.S.-China trade negotiations.

Elsewhere in currency markets, the dollar kept largely to well-trodden ranges against its peers.

The New Zealand dollar held steady at $0.6600 ahead of the policy decision of New Zealand's central bank, expected at 0200 GMT.

A slim majority of economists polled by Reuters expected the Reserve Bank of New Zealand to cut the official cash rate by 25 basis points to 1.50 percent, after its governor signalled an easing bias at the last meeting.

The euro was basically flat at $1.1195 after edging down overnight.

The euro zone will rebound next year from a slow-down in 2019 and unemployment will fall further, but inflation is likely to stay at this year's levels and below the European Central Bank's target, the European Commission said on Tuesday.

The pound, meanwhile, extended losses to a third day, dropping slightly to $1.3067.