The dollar trimmed losses after data showed a surprise rise in retail sales last month as well as an uptick in underlying inflation.
The euro rose to a 2-1/2 week high against the U.S. dollar and was on track for its largest percentage gain in more than two months.
The dollar was on a firmer footing ahead of domestic economic data, including inflation and retail sales numbers, due later this week.
Disappointment that a landmark U.S. tax overhaul may be delayed until 2019 put a brake on the currency's recent rally.
Investors balked at emerging details of the Senate Republicans' version of a tax cut plan.
Paul Ryan on Wednesday left the door open to a possible delay in implementing a huge corporate tax cut.
Investors renewed bets that monetary policy will continue to diverge between the United States and the euro zone.
Investors' wariness about the status of the U.S. economy and tax reform plans set the tone.
The dollar rose broadly after the release of U.S. manufacturing and services sector data that beat estimates, reversing an earlier slide.
The dollar fell to its lowest in a week after Republicans in the House of Representatives released proposals to overhaul the tax code.
The dollar climbed on Wednesday, nearing a 3 1/2-month high against the yen.
The dollar index was on track for its best month since February.
The dollar's direction will be swayed more by U.S. President Donald Trump's foreign policy than it will be by the next chair of the U.S. Federal Reserve.
Investors took profit and grew cautious amid news that President Donald Trump's former campaign manager faces conspiracy charges.
The euro slipped for a second day on Friday, on track for its biggest weekly loss of the year.
The euro fell from a one-week high on Thursday after a European Central Bank meeting.
The dollar dipped on Wednesday against a basket of currencies, struggling to post further gains.
The dollar edged down, stepping back from recent highs as market attention turns to who will next head the U.S. central bank.
Investors bet that an emphatic election victory for Japan's ruling party would see a continuation of the ultra-loose "Abenomics" policy.
The dollar rose as progress on U.S. tax reforms raised prospects of a fiscal lift to the economy.