In Ankara, an off-duty police officer opened fire and killed Russia's ambassador to Turkey at an art gallery in the Turkish capital Ankara. Russia and Turkey have been on opposing sides of the conflict in Syria, straining relations.

Later in Berlin, a truck ploughed into a crowded Christmas market, leaving at least nine dead and up to 50 injured. It was not immediate clear who was behind the attack.

Currency traders typically move into the yen from the dollar and riskier currencies in times of geopolitical nervousness.

"These developments contributed to market jitters and safety bids for the yen," said Eric Viloria, currency strategist at Wells Fargo Securities in New York.

Earlier on Monday before the attacks, traders were selling the dollar against the yen on lower U.S. Treasury yields and data that showed Japan's export performance improved strongly in November.

The greenback has rallied since the Nov. 8 U.S. election, underpinned by expectations of tax cuts, infrastructure spending and looser federal regulations under President-elect Donald Trump.

The yen was up as much as 1.2 percent against the dollar before subsiding to 117.07 yen, down 0.8 percent on the day. It hit 118.66 yen on Dec. 15, which was its weakest since Feb. 2, according to Reuters data.

The Japanese currency moved 1.1 percent higher against the euro at 121.83 yen.

The Turkish lira shed 0.5 percent to 3.5245 liras per dollar.

The Russian ruble reversed its losses tied to the Ankara attack and was last up 0.3 percent at 61.8795 rubles to the dollar.

The Federal Reserve's hint of a possibly faster pace of interest rate increases next year helped propel the dollar last week. Fed Chair Janet Yellen revived some bids for the greenback in U.S. afternoon trading after she said the improvement in the labour market signals wages will likely pick up.

"It seems like she is acknowledging the continued improvement in the jobs market. That's pretty consistent with what she and other policymakers have been saying," Viloria said.

The dollar index, which measures the greenback against the euro, yen and four other key currencies, was up 0.18 percent at 103.140. On Dec. 15, it touched 103.56, its highest since December 2002.

The benchmark 10-year Treasury yield traded six basis points lower at 2.536 percent.

(Additional reporting by Jemima Kelly in London and Tokyo markets team, editing by G Crosse)

By Richard Leong