The dollar index <=USD>, which measures the greenback's strength against a basket of six major currencies, was about 0.7% lower at 95.995, after slipping to a 13-month low of 95.701. For the week, the index was down 2.2%, its biggest weekly decline since early May, 2016.

"A historic slide in U.S. Treasury yields served as the straw that broke the dollar?s back and its handle on three-year highs reached a couple weeks ago,? said Joe Manimbo, senior market analyst at Western Union Business Solutions, in Washington.

"Economic uncertainty is spreading about as fast as the coronavirus which is heaping pressure on the Federal Reserve to follow up its big rate cut this week with another when it meets later this month," he said.

Investors have slashed expectations for U.S. interest rates after an emergency Fed rate cut of 50 basis points earlier this week to counter the economic fallout from the spreading coronavirus.

Worries about the outbreak have left market fundamentals in the dust, and the 10-year note yield 10YT=RR sank to a record low. That is wiping out the yield advantage that had fueled a popular carry globally - borrowing at negative rates in the euro and yen to buy U.S. assets. Markets now bet the Fed will again cut rates by 50 basis points this month.

The euro was about 0.7% higher at an eight-month high of 1.1311. Against the Japanese yen, the dollar was down 0.6% at 105.49 yen, a more than six-month low.

Currency volatility gauges rose on Friday, with one-month euro-dollar implied volatility reaching its highest since November 2018.

The dollar found little support from data that showed U.S. employers maintained a robust pace of hiring in February, giving the economy a strong boost as it confronts the outbreak that has stoked fears of a recession.

"The print is very impressive," said John Doyle, vice president for dealing and trading at Tempus Inc in Washington. "But I think the positivity of the numbers will be drowned out by the overarching risk-off environment today."

Sterling extended gains against the broadly weaker dollar, and was boosted by comments from the European Union's chief Brexit negotiator that a trade deal between Britain and the bloc was still possible this year. The currency was up 0.5% at $1.3021 .

By Saqib Iqbal Ahmed