The dollar has gained in recent sessions from solid data and because of fragile risk sentiment, as investors gauge the economic ramifications from the coronavirus outbreak in China, where the death toll continues to climb.
The focus for Friday is non-farm payrolls data, which are expected to confirm that the US labour market is in robust health.
MUFG analyst Derek Halpenny said weak data in Germany undermined European Central Bank President Christine Lagarde's comments on Thursday that the euro zone economy was stabilising.
"The hard data sits inconsistently with most sentiment data pointing to some improvement. But the political line that `recovery is coming' is losing credibility fast," Halpenny said.
"The October 2019, low of $1.0879 is now a credible near-term target given the scale of weakness in the German data, especially if the much-anticipated improvement in the coronavirus outlook fails to materialise."
Elsewhere, the offshore yuan slipped 0.2pc to 6.99 yuan per dollar but remained below the 7 level it crossed earlier this week.
The offshore yuan was headed for a small gain this week, supported by central bank stimulus and China's announcement on Thursday of tariff cuts on US imports.
The Australian dollar, often seen as a proxy for China, weakened 0.5pc to $0.6699 after the Reserve Bank of Australia slashed growth forecasts in its quarterly economic outlook, blaming bushfires and the coronavirus.
The US dollar traded at 109.9 yen on Friday, just below a two-week high reached earlier. For the week, the dollar was on course for a 1.5pc gain versus the yen, which would be its biggest weekly gain since July 2018.
The dollar index, which measures the currency against a basket of rivals, edged 0.1pc higher to 98.557, near its strongest since mid-October.
Sterling traded near a six-week low against the dollar and fell against the euro. It was headed for its worst week since the aftermath of the December general election, dogged by persistent worries about negotiations between Britain and the European Union for a post-Brexit trade deal.
The pound was last down at $1.2923. It staged a small recovery against the euro, rising 0.1pc to 84.86 pence.