The dollar index versus a basket of six major currencies  was at 97.832 after reaching 97.882 on Thursday, its highest since May 3.

The greenback reached the two-week peak on robust U.S. housing data and a weekly jobless claims report which pointed to sustained labour market strength for the world's biggest economy.

The U.S. currency also drew strength as its counterparts such as the euro and pound were confronted with a number of bearish factors.

"The euro is weighed down as the (euro) zone is saddled with weak economic fundamentals and Italian political concerns, while its all about Brexit for the pound," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

Italy's right-wing League party will "tear apart" European Union rules which are "strangling" the country if it scores well in a May 23-26 European parliamentary election, Italian Deputy Prime Minister Matteo Salvini said on Thursday.

The euro was steady at $1.1175 after falling to $1.1166 overnight, its lowest since May 6. The single currency has shed 0.55% this week.

Britain faces a potentially disorderly exit from the European Union as Prime Minister Theresa May has struggled to keep her Brexit deal and her premiership.

The possibility of a chaotic departure from the EU has pushed the pound to a three-month trough of $1.2788 on Thursday. Sterling last stood at $1.2796, having slumped 1.5% this week.

The dollar was nearly flat at 109.850 after gaining 0.2% the previous day.

Against the safe-haven yen the greenback fell to a 3-1/2-month low of 109.020 at the start of the week when a trade war between the United States and China intensified.

The Australian dollar was steady at $0.6891.

The Aussie was in close reach of a 4-1/2-month trough of $0.6886 plumbed on Thursday after soft domestic employment data heightened expectations for an interest rate cut by the Reserve Bank of Australia.

The 10-year U.S. Treasury note yielded 2.396%, having pulled back from a near two-month low of 2.354% brushed the previous day.