In late European trade, the euro rose to 1.3450 dollars, from 1.3428 dollars late on Thursday in New York.

The dollar advanced to 121.72 yen, from 121.37 late on Thursday.

On Wednesday the US currency had reached 121.88 yen -- the highest level since February 13.

Figures released Friday showed that US sales of existing homes fell by 2.6 percent to an annual rate of 5.99 million in April, compared with forecasts for a more moderate fall to 6.115 million units from the March level of 6.120 million.

The figures contrasted with strong new home sales data released on Thursday and would likely renew worries that the slowing US real estate sector may hurt the wider economy.

"With sales down during the month, the months' supply of homes on the market jumped to 8.4 months, the highest level since August 1992," noted Drew Matus at Lehman Brothers.

"This suggests the housing market correction will continue, as expected, through at least the remainder of the year," he added.

The immediate impact on the dollar was fairly limited, however, as traders might be waiting for better market liquidity next week to establishe fresh positions, analysts said.

"In the wake of overnight volatility and ahead of the long weekend, with many traders already taking today off, dealers are looking to square up quickly into the London close and before US midday hoping for better trading conditions next week," said Rhonda Staskow at Thomson's IFR Markets.

The dollar also came under pressure against the euro on interest rate differentials, as eurozone bonds have underperformed US Treasuries.

Meanwhile, a recovery in equity markets has helped keep risk appetite strong in global markets, depriving the dollar of the safety bids it enjoys during moments of heightened market nervousness.

The yen has also suffered from this type of trading, as it is a typical funding currency for higher-risk investments in other countries.

In Britain the pound was well-bid following a small upward revision in economic growth figures early in the day. First quarter growth was tweaked up to a yearly rate of 2.9 percent from the previous 2.8 percent, while the quarterly rate remained at 0.7 percent.

Despite showing some small easing in household consumption, exports and business investment, the data shows growth remains above trend, suggesting the Bank of England will remain on its current monetary tightening path.

"Demand remains pretty solid, and this will worry the BoE about firms' pricing power," said Loynes, who expects rates to rise to 6.00 percent this year, with the next hike as early as next month.

The euro changed hands at 1.3450 dollars, against 1.3428 dollars late on Thursday, 163.73 yen (163.00), 0.6779 pounds (0.6775) and 1.6519 Swiss francs (1.6486).

The dollar stood at 121.72 yen (121.37) and 1.2281 Swiss francs (1.2274).

The pound was being traded at 1.9841 dollars (1.9845).

On the London Bullion Market, the price of gold fell to 651.50 dollars per ounce, from 659 dollars late on Thursday.