The US dollar got a lift on Friday from a sharp rebound in US retail sales which raised the possibility of US interest rates moving slightly higher.
The euro slipped to US$1.2726 in late trading, from US$1.2791 late on Thursday.
The US dollar stood at ?116.26, from ?115.27.
"The robust retail sales report was the final blow in what has proved to be an ill-fated week for dollar bears, not the least of which was yesterday's [Thurs-day's] terrorist attempt in London," said Michael Woolfolk at Bank of New York.
Earlier in the week, a run of 17 consecutive rate hikes in the US came to a halt when the Federal Open Market Committee kept the benchmark rate unchanged at 5.25 percent. The Federal Reserve said, however, that the outlook for rates would depend on upcoming data.
Friday's US retail sales report implied that consumer spending was holding up well.
Retail sales rose by 1.4 percent last month, beating predictions of a 0.8 percent increase and rebounding from a drop in June. The latest figure was also the highest since January.
The figure for June was revised, however, to show a steeper fall of 0.4 percent compared with an initial estimate of 0.1 percent.
"Today's data will be difficult to square with the more dire forecasts of a hard landing next year, as the US consumer remains dauntless in the face of mounting pressures to curb spending," added Woolfolk.
He believed that expectations of rate cuts next year might be premature.
Meanwhile, prospects of a rate hike by the European Central Bank appeared to dim after Germany, the eurozone's biggest economy, said that inflation had cooled slightly to 1.9 percent last month, from 2.0 percent in June.
The data "may have tempered any expectations of aggressive monetary tightening," said Boris Schlossberg, an analyst at Forex Capital Markets.
The market's attention was now focused on the US inflation report due next week.
"Another 0.3 percent reading would bring inflation scares back into US markets," said Hans Redeker, BNP Paribas's global head of forex strategy.
"The market will have to assume that the Fed might reintroduce its tightening in September," he added.
The US dollar had dropped to two-month lows against the euro after the Fed marked a pause in its two-year tightening cycle.
Elsewhere, the yen was slightly lower on indications of softer than expected economic growth in Japan. Official figures showed that Japanese growth slowed to a quarterly 0.2 percent in the second quarter, down from 0.7 percent recorded in the first quarter and expectations of 0.4 percent.
The pound, meanwhile, drifted lower, having risen sharply after the Bank of England said this week that the annual rate of inflation might reach 3.0 percent over the next six months.
Sterling bought US$1.8905 at 9pm, down from US$1.8932 late on Thursday.