Yen at three-month high vs dollar, euro eyes $1.15

The dollar slid to 120.25 yen , its lowest since mid-May and down 1.35 percent on the day.

The dollar was also hurt by a pushback in expectations of when the Federal Reserve will raise interest rates. The dollar index, which measures the greenback's performance against a basket of six major currencies <.dxy> fell 0.8 percent to its lowest in two months, as more investors priced out chances of a rate hike in September.

The 10-year U.S. Treasury yield fell below 2 percent, diminishing the dollar's allure.

The dollar fell sharply against the euro. The euro was up 0.9 percent at $1.1490, having risen to $1.1499 earlier in the day, its highest in over six months, with the single currency also boosted by an unwinding of euro-funded carry trades.

(Reporting by Anirban Nag, editing by Nigel Stephenson)