The dollar weakened sharply against the yen and other currencies in Asia trade Monday as renewed uncertainty over the direction of oil production amplified a selloff after a post-U.S. election surge.

The U.S. currency fell more than 1.6% against the yen as jitters over the direction of oil production presented investors with a clear moment to cash in gains made from the rally powered by Donald Trump's election victory.

Saudi leaders have backed out of a Monday meeting between OPEC members and other non-OPEC producers including Russia, strengthening doubts that an effective deal can be reached on reining in production at Wednesday's main OPEC meeting.

"Guys are very, very nervous about the oil scenario, and you see that expressed in the sensitive [currency] pair," saidStephen Innes, a senior foreign-exchange trader at Oanda. That uncertainty was pushing investors into the perceived safety of the yen, he added.

A raft of U.S. economic data due this week also strengthened the case for selling after the initial feel-good expectations for a stimulus-driven Trump presidency appeared to have run their course.

"What we are seeing is unwinding of positions excessively built up recently," said Marito Ueda, director at FX Prime by GMO.

Around 4:25 GMT, the U.S. currency was changing hands at ¥ 111.90, after sliding as low as ¥ 111.35 earlier in the morning session, compared with ¥ 113.20 late Friday in New York. The dollar also slipped against other currencies in Asia, including the Chinese yuan and the Singapore dollar, though the move against the yen was the sharpest. The WSJ Dollar Index, a measure of the U.S. dollar against a basket of major currencies, was down 0.55% at 91.28. The euro was at $1.0655 from$1.0575 late Friday.

The dollar has staged a strong rally since Mr. Trump's election victory, on expectations that the new administration would boost fiscal spending and lower taxes in a move that could accelerate inflationary pressure. That would likely prompt the Federal Reserve to raise short-term rates more often than previously expected.

While investors can go along with some of the recent rises that pushed the dollar to an eight-month high against the yen last week, they can't explain the entire strength of the surge, said FPG Securities Chief Executive Koji Fukaya. The U.S. stock market's recent gains are based only on expectations, while higher U.S. yields that have been pushing up the dollar will eventually put a brake on the U.S. economy, he said.

"I don't expect the rosy scenario of Trumponomics?this Trump rally?to persist. Investors need to be prepared for a turnaround and turbulence in the market," he said.

Mizuho Securities chief FX strategist Kengo Suzuki said the dollar would continue to show vulnerability to selling pressure after the recent rally.

"It's highly possible that an adjustment phase has already kicked off," he said.

Still, in addition to the OPEC meeting, the dollar has many other events and economic indicators this week to factor in, including the U.S. ISM manufacturing data and the monthly jobs report, and Italy's constitutional referendum, Mr. Suzuki said. Those factors are likely to shape the direction of the dollar over the coming week, determining whether the Trump surge renews or dissipates.

Kenan Machado contributed to this article.

Write to Hiroyuki Kachi at hiroyuki.kachi@wsj.com

(END) Dow Jones Newswires

November 28, 2016 04:05 ET (09:05 GMT)

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