The dollar hovered near a one-month low against a basket of major currencies on Friday and was on course for its biggest weekly drop in five as investors worried that escalating trade tensions could hurt global growth.
The dollar index, which measures the greenback against a basket of six other major currencies, was down 0.48 percent at 89.43. For the week, the index was down 0.7 percent.
China urged the United States on Friday to "pull back from the brink" as President Donald Trump's plans for tariffs on up to $60 billion in Chinese goods moved the world's two largest economies closer to a trade war.
"People seem to be being just a little cautious with so many headlines coming out, and wondering what the next headline could be and how the market is going to react to it," said Chuck Tomes, senior investment analyst at Manulife Asset Management in Boston.
Expectations about shifting policy at global central banks was also injecting an element of uncertainty into currency markets, Tomes said. Trump's decision on Thursday to replace H.R. McMaster as national security adviser with John Bolton, a hawk who has advocated using military force against North Korea and Iran, could also be weighing on sentiment on the margins, Tomes said.