The US central bank's preferred inflation measure, the personal consumption expenditures price index excluding food and energy, has undershot its target since May 2012.
For the year, the dollar index was down 1.28 percent, its worst performance over a year's first nine trading days since 2010, according to Reuters data.
The ECB has pledged to continue its bond purchase program at least until September, and investors expect any rate hike to take place only next year. The dollar also slumped due to the lackluster factory inflation data which were also reported earlier.
The European Central Bank should revisit its communication stance in early 2018, accounts of its December meeting showed, suggesting that policymakers could soon start preparing markets for the end of the bank's massive stimulus. The euro bought $1.2119, trading around its highest level since January three years ago.
The Bank of France raised its fourth-quarter growth forecast to 0.6% (http://www.marketwatch.com/story/bank-of-france-hikes-4th-quarter-growth-forecast-2018-01-11) quarter-on-quarter from a previous forecast of 0.5%.
Bitcoin was 11.5 per cent lower at US$13,185 on the Luxembourg-based Bitstamp exchange after South Korea's government said it plans to ban cryptocurrency trading. The Australian dollar rose to $0.7891, from $0.7842, but shied away from stiff chart resistance at $0.7900.
The kiwi gained to 4.7080 Chinese yuan from 4.6838 yuan on Thursday after the Chinese government quashed speculation it was considering cutting its purchases of US Treasuries.
Euro, German bund yields hit fresh highs on German coalition progress
Rising bond yields and some disappointing corporate earnings also weighed on markets.
Dow Jones closed up by 0.80 percent, S&P 500 ended up 0.70 percent, Nasdaq finished the day up by 0.79 percent.
The news of progress towards a German coalition pushed the euro to a three-year high.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, following two straight sessions of decline.
Gold contracts for February in the United States increased by 0.2 percent to stand at $1,322.50 an ounce.
Brent crude prices hit $70 a barrel on signs of tightening crude stocks but settled off that level on Thursday, while a jump in energy shares helped lift US stocks.
But growth is into its fifth year, employment is at a record high and convergence between the 19-member currency bloc's core and periphery has restarted, all pointing to unabated growth and a declining need for central bank help. Despite this pullback, both WTI and Brent are still hovering near multi-year highs, amid declining U.S. crude inventories, the extremely cold weather observed in the USA recently, and the OPEC-led supply curbs.
Panthers LB Thomas Davis Says 2018 Will Be His Last Year
Over the 15 games he appeared in during the regular season, he recorded 76 tackles, 2.5 sacks, and recovered a fumble. On Friday, Davis told the NFL Network's Brooke Cersosimo that 2018, his 14th season, would be his last.