Looming U.S. trade data and concern that central banks were looking to diversify away from U.S. assets kept the dollar pinned near a two-month low against the euro on Friday.
U.S. trade figures, due at 8:30 a.m. EST, are expected to show the deficit widened to $56.5 billion in January, the second highest shortfall on record.
Concerns over the United States' huge trade imbalance dragged the dollar to record lows against the euro at the end of last year and have helped push the U.S. currency through key chart support levels this week.
"We've had a decent technical break looking toward today's trade data but now that we are getting close to it some people are having slightly cold feet," said Ian Gunner, head of foreign exchange research at Mellon Financial Corporation.
The dollar was steady at $1.3412 to the euro at 6:10 a.m. EST, less than half a cent above two-month lows hit on Thursday. The dollar was also little changed against the yen at 104.18 yen.
Dollar sentiment was also impacted after India's central bank governor said diversification of its foreign currency holdings was being discussed within the bank and was a subject of ongoing debate among all central banks.
India's foreign exchange reserves are at a record high of $135.66 billion, and are the sixth largest in the world.
The comments from India came just a day after Japan's Prime Minister Junichiro Koizumi said foreign exchange reserves should be diversified -- comments which sent the dollar reeling.
Japan, the world's largest holder of foreign exchange reserves, later said that it had no plan to shift funds out of the U.S. currency for now.