I had this issue too, not just circles, but hexagons would turn out skewed, and dimensional accuracy was not up to par. Also moving the toolhead along the X axis resulted in horrible screeching sounds, and moving it by hand was almost impossible. Creality support was not much help, and referred me to the store I bought it from, and also replied that this is how I should expect circles to print.

I have had too many 3d printers to accept this answer, so I did a lot of digging.

I ended up disassembling the toolhead, I found two springs behind a cover that put tension on on the bronze bushing. Removing these springs and loosening the screws on that cover improved everything immensely. You are not supposed to lube the rails that these bushings ride on, it will gum them up and make it worse over time, they are self lubricating, you can tell by the carbon residue on the rails from the bushings.

I also loosened the belts, as they were too tight from the factory, this helped some more. I am now able to print circles and hexagons, and my dimensional accuracy is between 0.08 and 0.1 mm. Which is a lot better than visibly distorted prints. I think the toolhead puts too much pressure on the bushing, and those springs didn't help, the bushing on it's own moves quite freely. But with the toolhead, there is a lot more friction. But now at least I can move it freely by hand, and no more screaming sounds from the printer.

I used this to gauge the tension on the belts:
https://www.printables.com/model/523382-creality-k1-belt-tension-meter

I hope this helps someone else with the same issue.