The dollar had got a small boost late on Tuesday after Japans top financial diplomat Haruhiko Kuroda said the yen should not appreciate against the greenback.
But dealers said the run-up quickly ran out of steam and the dollar fell back through the 130 support level again, triggering stop-loss selling.
People are a little bit cautious about the dollar. Theres worries about the U.S. equity market and more talk about the current account deficit, said Rob Hayward, senior forex strategist at ABN Amro. And people wanting to push things about might feel safer trying it against the yen.
At 0958 GMT, the dollar was trading at 129.75 yen, down around a third of a per cent from closing New York levels and not too far off one-month lows hit last week. Meanwhile, the euro, dogged by the threat of German strikes, was only slightly softer around $0.8895.