The dollar backed away fairly quickly from its highs but until the Federal Reserve signals otherwise and the cost of borrowing in Europe and Japan starts rising, prospects for even higher US rates will keep buoying the dollar, traders and analysts said.
"The US rate argument is unequivocal. Rates are going to keep on going up for the time being," said Ian Gunner, head of foreign exchange research at Mellon Bank.
By 1257 GMT, the dollar was around 117.78 yen, down a third of a percent on the day after climbing as high as 118.38 yen, its highest since August 2003.
The euro fell as low as $1.1783, an 18-month low, before tracking back slightly to $1.1811, flat on the day. The euro was buying around 139.30 yen, down about 0.4 percent.
The euro had tumbled one percent on Friday after it failed to pierce a key technical and psychological level at $1.20 in the wake of a weak US jobs report.
"We're consolidating Friday's sharp move lower. I wouldn't be surprised to see a bit of a pullback first. I wouldn't want to pile in until see $1.1759 level give away - the low for 2004," said Gunner.
BNP Paribas said in a research note that social unrest in Paris and other parts of France, culminating in several nights of rioting, had become a euro drag.