The index gained 1.2 percent on Thursday to mark its biggest daily percentage gain in nearly six months a day after the U.S. central bank raised interest rates for the first time in a year. The Fed also signaled it was likely to increase rates three more times in 2017, up from the two increases forecast at the central bank's September meeting.
The projections, combined with expectations that U.S. President-elect Donald Trump's incoming administration may boost U.S. economic growth with fiscal stimulus, sent the dollar shooting higher and brought parity with the euro back in play.
Profit-taking ahead of the weekend and expectations of a squeeze on dollar liquidity heading into year-end dampened the dollar's gains on Friday, analysts said.
"We've had such big moves," said Axel Merk, president and chief investment officer of Merk Investments in Palo Alto, California. "People are squaring positions."
The euro was last up against the dollar at $1.0438 after hitting a nearly 14-year low of $1.0364 Thursday, while the dollar was up against the yen at 117.82 yen after hitting a roughly 10-1/2 month high of 118.66 yen Thursday. It gained 0.4 percent against the Canadian dollar to C$1.3382.
Only 10 of more than 50 polled by Reuters earlier this month forecast the dollar reaching parity with the euro within the next 12 months. On Friday that threshold was only about 4 percent away.