The dollar fell from a seven-month high against a basket of currencies Friday after U.S. data dented optimism about the economy and reinforced expectations the Federal Reserve will continue its bond-buying program for the foreseeable future.
Strong gains in other currencies added to pressure on the dollar. Sterling jumped after the Bank of England's governor suggested he did not want the British pound to fall any further. The euro gained on the prospect of EU leaders looking at short-term ways of boosting faltering euro zone economies.
U.S. consumer sentiment tumbled to its lowest since December 2011 in early March, while manufacturing activity in New York cooled slightly. Separate data showed U.S. consumer prices rose in February as the cost of gasoline surged, but there was little sign of a broad pickup in inflation.
(Read More: US Consumer Sentiment Tumbles to December 2011 Lows)
"It looks like we still have some scope to continue with QE," said Andrew Dilz, foreign currency trader at Tempus Consulting in Washington, referring to the Fed's bond-buying, or quantitative easing program.