The dollar index, which measures the greenback against six major peers, decreased 1.45 percent to 103.6330.
The British pound rallied after Britain's central bank, the Bank of England, on Thursday raised its benchmark interest rate to 1.25 percent, the highest level since 2009.
Swiss franc also picked up steam after the Swiss National Bank delivered a surprise interest rate hike.
In late New York trading, the euro rose to 1.0580 U.S. dollars from 1.0424 dollars in the previous session, and the British pound was up to 1.2357 dollars from 1.2124 U.S. dollars in the previous session. The Australian dollar rose to 0.7064 U.S. dollar from 0.6978 dollar.
The U.S. dollar bought 132.00 Japanese yen, lower than 134.09 Japanese yen of the previous session. The U.S. dollar decreased to 0.9638 Swiss franc from 0.9984 Swiss franc, and it was unchanged at close to 1.2928 Canadian dollars from 1.2928 Canadian dollars.
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