The possible resumption of U.S. stimulus talks for COVID-19 relief has also weighed on the dollar as a safe haven. Republican and Democratic senators agreed on Thursday to revive those discussions

Overall, the greenback ended the week on a loss against a currency basket. The week started off on a negative note for the dollar with positive news on a vaccine for COVID-19, but the market has since moved back and forth between focusing on coronavirus cases and the virus drug.

Pfizer Inc said it had applied for emergency use authorization in the United States for its COVID-19 vaccine.

"We think we are in the early stages of a recovery in the global economy and trade from the shock of the pandemic and this will further" weigh on the dollar and support the euro," Jonathan Petersen, markets economist, at Capital Economics, said.

U.S. Treasury Secretary Steven Mnuchin, meanwhile, defended on Friday his decision to end several of the Federal Reserve's key pandemic lending programs on Dec. 31, saying Congress should use the money to help small U.S. companies with grants instead.

The dollar briefly rose overnight after the Mnuchin news late Thursday.

"The request comes as most lending facilities haven't been tapped for more than the amount committed by the Treasury to backstop the programmes, suggesting market functionality is sufficient to warrant their expiration," said Monex Europe in a research note.

In afternoon trading, the dollar was flat against a currency basket at 92.369 in a quiet day for currency markets.

The euro was down 0.1% against the dollar at $1.1859 , posting a small weekly gain.

Action Economics noted some pre-weekend selling in the euro going into the London close.

"The lack of progress between the European Union and the U.K. on Brexit trade talks has likely kept a cap on the euro despite generally waning U.S. dollar sentiment," it said in its daily blog.

The Australian dollar - seen as a liquid proxy for risk appetite - posted its best monthly gain versus the U.S. dollar since April. It last traded up 0.4% at US$0.7308 .

The New Zealand dollar hit new two-year highs of US$0.6951 , helped by positive risk appetite. It was last up 0.3% at US$0.6938.

The U.S. dollar was up 0.1% versus the yen at 103.81 yen .

Elsewhere, Bitcoin rose to a three-year high of $18,824 on Friday, getting close to its all-time high of just under $20,000. It was last up 4.6% at $18,646.15.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve Orlofsky and Marguerita Choy)

By Gertrude Chavez-Dreyfuss