Its losses were biggest against the yen which, given its safe-haven status, was also helped by weaker-than-expected Chinese trade data, traders said.
The dollar was down 0.4 percent at 102 yen. The dollar slipped against the Swiss franc near 0.88 francs, its lowest in three weeks, as U.S. two-year Treasury yields fell sharply.
The dollar index last stood a around 79.44, down about 1.2 percent for the week.
Indeed, the index has relinquished most of the gains made since the Fed chair Janet Yellen suggested on March 19 that rates might rise as soon as early next year. Those comments were made after the Fed said it would wait a "considerable time" after ending its asset-buying program before lifting rates.
Given the dollar's struggles, the euro inched up near $1.39. But traders are wary of pushing it higher, given expectations that the European Central Bank could step up its rhetoric against a strengthening currency and its impact on disinflation.
Bundesbank chief Jens Weidmann reiterated on Thursday that if there is a prolonged period of low inflation, the ECB will consider unconventional instruments. Last week, ECB chief Mario Draghi flagged the chances of quantitative easing.
The common currency faltered against the growth-linked Australian dollar, which was boosted by strong local data.
The Australian dollar broke above tough chart resistance at 94 U.S. cents after data showed Australian employment grew more than expected in March. The data reinforced the view that
Australia's central bank would keep interest rates on hold for a while and hold off from cutting them further.
The Aussie rose to almost $0.95, its highest level since last November, and was last up 0.5 percent.
The New Zealand dollar touched a high but slipped on some profit taking and was last above $0.87, flat on the day.
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