The euro bought 1.2122 dollars at 2100 GMT from 1.2227 late on Thursday in New York. Earlier the euro had tumbled to 1.2106 dollars, its lowest level since September 8, after the publication of the US trade data.

The dollar rose to 108.65 yen, from 107.41 yen.

Though the US trade deficit widened in April to 57 billion dollars from 53.6 billion in March, it was better than the 58 billion dollars pencilled in by analysts.

Because March's shortfall was not as bad as the 55 billion indicated in last month's data release, analysts said Friday's data was likely to mean that first-quarter gross domestic product growth in the United States could be upwardly revised.

"The deficit is not getting better, but at least it isn't getting much worse," said Mitul Kotecha, head of global currency research at CALYON.

Part of the dollar's strength was linked to congressional testimony from Federal Reserve chairman Alan Greenspan on Thursday widely viewed as indicating the Fed will keep making steady, quarter-point rate hikes.

The euro has been under pressure throughout most of June, following rejections of the proposed EU constitution by French and Dutch voters.

"The post-referendum turmoil and mounting market speculation of an ECB rate cut should push the euro even weaker versus the dollar in the next three months to 1.17 dollars but thereafter it should stabilize and then very gradually recover," said Societe Generale analyst Brian Hilliard.

"There seems to be a snowball effect with the euro," said IDEAGlobal currencies analyst Sean Callow.

"People are just piling on and selling it because other people are selling it. No one knows where the bottom is. They may be over-shooting with the euro," Callow said.

Currency markets will monitor events at the Group of Eight finance ministers' meeting in London Friday and Saturday.

Chinese officials will also attend the G8 meeting, so investors will be watching carefully for any signals on currency reform in that country.

A report in the New York Times Friday said China's political leadership is actively considering breaking the yuan's peg to the dollar, but the yuan's initial value under the new system could be very close to its current dollar value. The report cited interviews with current and former senior Chinese officials.

In late New York trade, the dollar stood at 1.2680 Swiss francs from 1.2543 Thursday.

The pound was being traded at 1.8123 dollars from 1.8204 late on Thursday.