The greenback extended its weekly slide on Friday, with the Bloomberg Dollar Spot Index dipping 0.2% to 1191.20, its weakest level since May. The U.S. currency's weekly decline widened to 0.8%, marking its largest weekly drop since August, as sentiment turned increasingly bearish on the dollar.

Market participants are drawing parallels between the U.S. Treasury's expanded commitment to bond buybacks and Japan's historical approach to suppressing borrowing costs, fueling concerns over potential long-term dollar weakness. Andrew Hazlett, a foreign exchange trader at Monex Inc., noted that despite better-than-expected services and composite PMI readings from S&P Global, the Treasury's increased long-dated bond repurchase program presents a structural headwind for the dollar. This worry, he said, is not something a single set of economic data can reverse, and it has raised questions about whether the U.S. remains committed to a strong-dollar policy.

In other currency pairs, the British pound advanced 0.2% to 1.3653 against the dollar, supported by the fastest expansion in the U.K.'s private sector in four months and favorable weather conditions. The euro held steady at 1.1683 against the dollar, benefiting from the eurozone's strongest manufacturing growth in more than four years. The dollar was little changed against the Japanese yen at 159.00, even as Japan's key price gauge accelerated for a second consecutive month, intensifying expectations that the Bank of Japan may raise interest rates again as soon as September.