The dollar earlier reacted little to U.S. data showing modest inflationary pressures in the U.S. economy in September and a fall in U.S. jobless claims. Currency traders were more focused on the stock market's price action.
A fall in the U.S. equity index futures, following the drop in Citigroup Inc. shares, prompted investors to sell the dollar and buy the yen.
"S&P is down further and this is hurting the carry trade. Dollar/yen and other yen crosses are getting hit hard," said a trader with Forex.com in Bedminster, New Jersey.
Investors use the low yielding yen to buy higher-yielding currencies and other assets such as the Australian and New Zealand dollars. The dollar slipped 0.1 percent against the yen to 115.17, off the day's highs at 115.92. The euro fell half a percent to 166.13 yen.
Earlier on Thursday, U.S. data showed that the underlying U.S. inflation index came in line with expectations and jobless claims fell more than expected in the latest week.
"Very much the data was as expected this morning with core PCE coming in at 1.8 percent leaving the door open to future Fed cuts," said Camilla Sutton, currency strategist at Scotia Capital in Toronto. "Initial jobless claims at 327,000 remain fairly elevated so some pressure there on employment in the US.
Following the data, markets have priced in a less than 50 percent chance the Federal Reserve will cut rates again in December. On Wednesday, the Fed cut benchmark interest rates by a quarter of a percentage point to 4.5 percent.