SINGAPORE, Sept 8 Reuters The dollar fell on Friday but was still headed for its longest weekly winning streak in nine years, bolstered by a resilient run of U.S. economic data that has also put the end of the Federal Reserve39;s aggressive rateincrease cycle into question.

China39;s onshore yuan meanwhile dropped to its lowest level since 2007, as it battles capital outflow pressures and a widening yield gap with major economies.

The U.S. dollar index , which measures the greenback against major peers, was last 0.1 lower at 104.93 but remained not far from the previous session39;s sixmonth high of 105.15.

The index was on track to extend its gains into an eighth straight week, and is up 0.6 thus far.

The euro , the largest component in the dollar index, was staring at eight straight weeks of losses, with the single currency last gaining 0.1 to stand at 1.0709, having fallen to a threemonth low of 1.0686 on Thursday.

The relative divergence of the U.S. and European economy is a key topic again and the weaker dollar story has just faded away, said Dane Cekov, senior macro and FX strategist at Nordea Markets.

Data out this week showed the U.S. services sector unexpectedly gained steam in August and that jobless claims hit their lowest level since February last week, while in the euro zone, industrial production in Germany, Europe39;s largest economy, fell by slightly more than expected in July.

The U.S. economic data is still robust and in Europe it39;s flattening…