The dollar slumped against its rivals on Thursday after data showed U.S. inflation undershot economists' expectations.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.42% to 94.82.
The Labor Department said on Thursday its consumer price index rose 0.1% last month, and 2.3% for the year through September, missing economists' forecasts for a 2.4% rise.
"Inflation continues to underwhelm the Fed, but is unlikely to deter the pace of gradual rate hikes ahead," BNP Paris said in a note clients.
The greenback was also kept in check by a stronger euro, though analysts warned the single currency has limited room for upside amid contagion risks from Italy.
The Italian Senate approved the motion to push back the balanced budget from 2020 to beyond 2021 after it introduced a higher-than-expected budget deficit target at 2.4%, raising the risk of backlash from Brussels.
Some fear that a rift between Italy and bloc could see the country exit the European Union, but there's little risk of an "Italix," said Maria Paola Toschi, global market strategist at JP Morgan Asset Management.
EUR/USD rose 0.46% to $1.1575.
GBP/USD rose 0.05% to $1.3202 as traders awaited a possible breakthrough in Brexit-deal negotiations between the UK and EU, which could come as soon as Monday, according to media reports.
The rout in global markets, meanwhile, did little to lift demand for the safe-haven yen against the greenback.
USD/JPY fell 0.09% to Y112.18.
USD/CAD fell 0.31% to C$1.3026 as the loonie weakened after oil prices came under pressure following a large build in U.S. crude inventories.