The dollar index against a basket of major currencies was down 0.2 percent at 100.390 .DXY, weighed down following the release of Friday's weak U.S. retail sales and consumer prices data and as flight-to-safety drove U.S. Treasury yields to five-month lows, according to Reuters.
The U.S. currency extended losses from the previous day and retreated to 108.135 yen JPY=, its lowest since mid-November.
The yen remained broadly bid against other currencies as well. The euro and the pound slid to five-month troughs of 114.955 yen EURJPY= and 136.05 yen GBPJPY=, respectively.
Increasing geopolitical risks another notch, North Korea on Sunday made what was believed to be a failed missile test launch. Regional tensions have risen over the past weeks as U.S. President Donald Trump has taken a tough rhetorical line with Pyongyang.
"It is unclear whether the situation over North Korea will escalate into military action, but uncertainty is increasing and the dollar continues to edge lower. The dollar also looks shaky technically, after slipping below the 200-day moving average of 108.80 yen," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
Japan's proximity to the Korean Peninsula, however, means that the yen's safe-haven status could be eroded if tensions between Washington and Pyongyang escalated into open conflict.
"Right now the markets are still functioning, with the reaction to the situation being weaker equities, lower Treasury yields and the yen firming against the dollar," said Koji Fukaya, president at FPG Securities in Tokyo.
"But it could be an entirely different matter should an international emergency actually take place," he added, reckoning that the dollar could benefit due to its position as the world's principal reserve currency.
With the bulk of the market's focus on how the standoff between the United States and North Korea will play out, the semi-annual U.S. Treasury currency report released late on Friday did not receive as much attention as some had initially expected.
The Trump administration declined to name any major trading partner as a currency manipulator in the highly-anticipated report on Friday, backing away from a key Trump campaign promise to slap such a label on China.
The U.S. Treasury, however, ensured that currency policies would remain a sticking point going forward by keeping China, Germany and Japan on a "monitoring list."
"Market reaction, if there was one, to the currency report has already faded. The U.S. Treasury does not look like it will take a strong stance on currencies. But in the case of the Trump administration the market will need to watch out for what his trade advisors may have to say on this issue," said Yamamoto at Mizuho Securities.
The euro was a shade higher at $1.0622 EUR=, having spent the previous session in a very tight range.
Wariness over the first round of the French presidential elections on April 23, another potential source of geopolitical risk keeping global markets nervous, was expected to cap the common currency this week.
The Australian dollar added 0.1 percent to $0.7588 AUD=D4 while the New Zealand dollar rose 0.4 percent to $0.7030 NZD=D4.
The risk-sensitive Aussie and kiwi fell to three- and one-month lows, respectively, in the middle of last week. But they have pulled back on upbeat local economic indicators and as the greenback fell broadly on Trump's comments that the dollar was getting too strong.
Currencies, including the Australian dollar, which tends to react to the economic fortunes of China, showed little response to data showing the Chinese economy grew at a slightly faster-than-expected 6.9 percent in the first quarter.