In U.S. trading on Friday, EUR/USD was up 0.22% at 1.3519.
Congress must approve a spending package by Oct. 1 or risk a partial government shutdown afterwards.
While markets are expecting a last-minute deal, uncertainty steered investors away from the U.S. currency on Friday.
The Democratically-controlled Senate earlier Friday approved a stop-gap spending bill to fund the government through Nov. 15.
The bill was stripped of language defunding President Barack Obama's healthcare reform law, though the legislation will go back to the Republican-controlled House of Representatives, which called for defunding the president's healthcare law in the first place.
Mixed data softened the greenback as well.
Elsewhere, the Thomson Reuters/University of Michigan consumer sentiment index fell to 77.5 in September from a reading of 76.8 the previous month.
Analysts were expecting the index to rise to 78.0 this month.
Separately, official data showed that U.S. personal spending rose 0.3% in August, in line with expectations, after an upwardly revised 0.2% increase the previous month.
Data also showed that personal income in the U.S. rose 0.4% last month as expected after an upwardly revised 0.2% gain in July, also in line with expectations.
Core personal consumption expenditures, which exclude food and energy, rose 0.2% in August, more than the expected 0.1% gain after a 0.1% increase in July.
The data continued to cloud market expectations as to when the Federal Reserve will begin taper its USD85 billion monthly bond-buying program, which weakens the dollar by driving down interest rates to spur recovery.
Meanwhile in Europe, preliminary data showed that Germany's consumer price index was flat in September, in line with market expectations.
The greenback was down against the pound, with GBP/USD up 0.59% at 1.6136.
Across the Atlantic, sterling strengthened after Bank of England Governor Mark Carney told the Yorkshire Post that he sees no need for more bond-buying given the signs of recovery in the U.K. economy.
The dollar was down against the yen, with USD/JPY down 0.78% at 98.25, and down against the Swiss franc, with USD/CHF trading down 0.50% at 0.9058.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.05%at 1.0305, AUD/USD down 0.46% at 0.9316 and NZD/USD trading down 0.18% at 0.8277.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.32% at 80.37.
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