The dollar languished near three-year lows on Friday, weighed down by weak U.S. data and the prospect of ultra-loose policy for months yet, while stocks paused for breath and a strong commodities rally tailed off.
Analysts see little upside for the dollar following the Federal Reserve's pledge this week to continue with near-zero interest rates for an extended period while central banks in Europe, Asia and Latin America raise interest rates.
With weak U.S. economic data this week also offering no relief, the dollar index <.DXY>, which tracks its performance against a basket of major currencies, fell to its lowest level since July 2008 this week before recovering somewhat.
The index is down about 7.5 percent this year, making it one of the world's worst-performing assets, and is on track for its biggest weekly fall since mid-January.
The euro edged up 0.1 percent to $1.4840 by 0800 GMT, not far off a 17-month peak of $1.4882 hit on Thursday on trading platform EBS.
Sean Callow, a strategist at Westpac in Sydney, said sentiment toward the dollar was profoundly bearish with no catalyst for reversal, at least until all-important non-farm payrolls data next week.
Thursday's weak U.S. GDP and jobless numbers prompted 10-year U.S. Treasury bond yields to hold at 3.31 percent, on track for their biggest monthly drop in eight months.
With risk appetite ascendant, partly fueled by the assumption that rock bottom U.S. rates will continue to drive money into riskier assets, world equities as measured by the MSCI index <.MIWD00000PUS> are up by some 5 percent over the past two weeks, though they edged lower on Friday.
European shares slunk 0.1 percent lower <.FTEU3>, snapping a six-session winning streak, with investors taking profits from eight-week highs and as volumes were crimped by a holiday in Britain for the Royal Wedding.
The earnings season has been more positive than expected, but the concern is that the estimates are being revised negatively and that might be a signal for difficult times ahead, said Koen De Leus, strategist at KBC Securities in Brussels.
German government bonds were little changed ahead of euro zone inflation numbers for April which are forecast to hold at 2.7 percent year-on-year, well above the European Central Bank's 2 percent target ceiling.
Analysts said such a reading would remind markets that the ECB remains on track to raise interest rates for a second time this year.
The broad commodity market rally softened with silver pulling back by over a dollar from Thursday's $49.51 per ounce peak, its highest since 1980, while Brent crude for June dropped 0.4 percent to $124.52 a barrel.
Gold eased to $1,532.50 an ounce after hitting a lifetime high around $1,538 an ounce in the previous session.
The 19-commodity Reuters-Jefferies CRB index <.CRB>, a broad indicator of the commodity market, is up nearly 10 percent this year, making it the world's best performing asset group.
If the dollar continues to weaken, then it's only likely to boost gold as well as silver as the inverse relationship between the two assets persists, said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
With the dollar virtually friendless, the Australian dollar stood at $1.0924, still within easy reach of a 29-year peak of $1.0948.
The Chinese yuan cracked through the 6.5 per dollar line for the first time, indicating Beijing's determination to fight inflation and giving a leg up to other currencies.
(Additional reporting by Jessica Mortimer, Atul Prakash and William James in London, Ian Chua in Sydney, Umesh Desai and Jongwoo Cheon in Singapore; Editing by Catherine Evans)