The euro fell to 1.2622 dollars at 2100 GMT, down from 1.2676 late Thursday in New York. At one point, the single currency fell as low as 1.2606, the lowest since last October.

The dollar rose to 107.29 yen from 106.82 on Thursday.

The resurgent greenback shrugged off the University of Michigan's latest survey showing US consumer sentiment eroded again in May, with its main index falling to 85.3 from 87.7 in April. The reading is the lowest since March 2003 and below forecasts for a number of around 88.2.

Analysts said the dollar was still benefiting from other recent data that sparked a wave of dollar buying -- starting with jobs figures last Friday, continuing with trade figures earlier this week and culminating in very firm retail sales data Thursday.

"The narrower US trade deficit will have alleviated some of the structural worries for the dollar, and with many now focused on the cyclical issues, the recent strong US data has been very beneficial to the dollar," said Mark Austin at HSBC.

The dollar broke through a string of technical barriers against the euro, leading to further gains ahead of the weekend.

The US currency was also thought to be benefiting from the liquidation of short-dollar positions by hedge funds, which could need cash to make margin requirements, according to Refco currency analyst Mike Malpede.