The dollar slumped to more than two-and-a-half year lows against a basket of the other major currencies on Friday amid growing doubts over whether the Federal Reserve will be able to deliver another interest rate hike this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.2% at 91.31 in late trade after earlier touching a trough of 90.99, the lowest level since January 2015.
The index ended the week down 1.55%, the largest weekly percentage decline since late June.
Diminished expectations for a third rate hike this year compounded by heightened tensions with North Korea and worries over the economic impact of hurricanes in the southeastern U.S. pressured the dollar lower.
Concerns over political turmoil in Washington have also fed into recent dollar weakness.
An agreement to postpone U.S. debt ceiling talks until December, which would coincide with the Fed's policy meeting have diminished chances for a rate hike.
The dollar plumbed 10-month lows against the yen, with USD/JPY falling to 107.32, before pulling back to 107.81 in late trade.
The dollar ended the week down 2.2% against the Japanese currency, the biggest weekly percentage decline in around 13 months.
The euro ended slightly higher against the dollar, with EUR/USD at 1.2036 after rising as high as 1.2092 earlier, the most since January 2015.
The euro ended the week up 1.48% against the dollar and is up almost 14% against the dollar so far this year.
Demand for the single currency continued to be underpinned after European Central Bank President Mario Draghi indicated Thursday that the bank may start tapering its massive stimulus program this autumn.
Meanwhile, sterling rose to five-week highs against the softer dollar, with GBP/USD advancing 0.65% to 1.3195 late Friday.
The pound was boosted by stronger than expected data on UK manufacturing output growth.
In the week ahead, investors will be closely watching Thursday’s U.S. inflation report for fresh clues on the possible timing of the next Fed rate hike. A monetary policy announcement by the Bank of England will also be in focus.

Monday, September 11

Japan is to release data on core machinery orders.
Canada is to report on housing starts.

Tuesday, September 12

Australia is to release data on business confidence.
The UK is to publish its monthly inflation report.

Wednesday, September 13

Switzerland is to release data on producer price inflation.
The UK is to publish its monthly employment report.
The U.S. is to publish figures on producer price inflation.

Thursday, September 14

Australia is to release its monthly jobs report.
China is to publish data on fixed asset investment.
The Swiss National Bank is to announce its latest monetary policy decision and publish its policy assessment.
The Bank of England is to announce its latest interest rate decision and publish the minutes of its monetary policy meeting.
Canada is to report on new house price inflation.
The U.S. is to release data on consumer price inflation and initial jobless claims.

Friday, September 15

New Zealand is to release private sector data on manufacturing activity.
The U.S. is to round up the week with a string of economic reports, including data on retail sales, industrial production, manufacturing activity in the New York region and consumer sentiment.