The dollar softened against other currencies as economic data before the weekend are expected to confirm that U.S. households are becoming increasingly pessimistic. The greenback, which was hurt on Thursday by weak manufacturing activity indicators, is expected to be hit again by another drop in the University of Michigan consumer confidence index. This is forecast to drop slightly to 62.5 in May, another multi-year low, from 62.6 in the previous month. "Confidence continues to be slammed by high food and energy prices, deteriorating economic conditions including a loosening labour market and of course the ongoing drop in house prices," said Mitul Kotecha, head of global forex research at Calyon. Unlike the financial markets, which have stabilised somewhat after the aggressive policy moves of the Federal Reserve, the slide in the U.S. real economy has not bottomed out yet. The euro was buoyed by widespread gains in equity markets and improved risk appetite after Thursday's strong euro zone growth figures, which showed first quarter GDP rising 0.7 percent, almost twice the previous quarter's 0.4 percent rate. The yen remained weaker despite news that Japan also enjoyed better-than-expected GDP growth of 0.8 percent in the first quarter. The yen typically weakens as risk appetite improves as it is used by traders to fund higher-risk investments in other countries.