The dollar fell across the board Friday after unexpectedly weak trade deficit and consumer sentiment figures stoked worries about the outlook for a U.S. economic recovery.

The dollar rose broadly Thursday as several policymakers around the world warned the economic recovery was fragile, prompting investors to take profits on gains in higher-yielding currencies and assets.

The dollar rallied from a 15-month low against major currencies Wednesday in a technical rebound after selling pressure failed to push the U.S. currency through key levels.

The dollar firmed Tuesday from the 15-month low touched in the prior session as investors saw Monday's fall as too far, too fast.

The dollar fell to a 15-month low against a basket of major currencies Monday and the euro rose above $1.50 after the Group of 20 pledged to keep emergency stimulus spending in place until a global recovery is assured.

The dollar is likely to trade higher in the week ahead, with Friday's worse-than-expected U.S. non-farm payrolls data for October seen as the driving force for currency markets at least until mid week.

The dollar and yen rose Friday after a report showed the U.S. unemployment rate spiked and the economy lost more jobs than expected, stoking concerns about the U.S. economy and restoring safe-haven demand for both currencies.

The European Central Bank kept its main refinancing rate unchanged at a record low of 1.0 percent on Thursday, as expected by economists.

Investors are braced for signs on Thursday that the European Central Bank will soon start weaning banks off cheap and abundant liquidity given that expiry dates are approaching for the central bank's crisis measures.

The dollar held steady against a basket of currencies Thursday, a day ahead of a key government jobs report that will shed light on the health of the U.S. economy.

The dollar fell in choppy trading against the euro Wednesday after the Federal Reserve left interest rates steady, as expected, and said it intends to keep interest rates low for some time.

The U.S. dollar rose to a one-month high against a basket of currencies Tuesday as concerns about the global banking sector and weaker equity markets boosted the greenback's safe-haven appeal.

The dollar and yen fell Monday as improving economic data worldwide and rising stock prices eroded the greenback's safe-haven appeal.

While most oil comes from outside the U.S., it is traded almost exclusively in U.S. dollars. That means investors who are worried about the value of the dollar can easily convert their dollars to oil.

The dollar is likely to sink further against the euro and could hit the lows of July 2007 at $1.60, Roelof van den Akker, chartist at ING Wholesale Banking, told CNBC.