The US dollar closed out a horrific week on Friday with more losses, as a small improvement in the US current account gap failed to reverse the downward trend.
The euro rose to US$1.2010 at 10pm GMT from US$1.1973 late on Thursday in New York.
The dollar fell to ¥115.64 from ¥116.20 on Thursday.
After steep losses for the greenback this week, markets shrugged off news of a narrower US current account deficit during the third quarter as the improvement came on the back of one-off factors which were unlikely to be repeated.
Data published earlier on Friday showed the US gap narrowed by 1.0 percent to US$195.8 billion in the third quarter from the previous three-month period, as companies collected payments from foreign insurance companies for hurricane-related damage.
The deficit amounted to 6.2 percent of GDP, down from 6.4 percent in the second quarter.
"Dollar traders seemed to already take as much as they could of trade data for the week," analysts at Forex Capital Markets wrote.
Although the deficit was a bit better than expected, the analysts said "insurance payouts and donations from abroad, to help in the wake of Hurricanes Katrina and Rita, helped to close the gap. Despite this positive outcome, many remain skeptical for the fourth quarter."
"Stubbornly high consumer spending and subsequently low savings are likely to return the deficit to its broadening trend through the end of the year," they said.
Jay Bryson, global economist at Wachovia Securities, said he believes the dollar's rally for most of the year is now over, especially with an end in sight to the cycle of rate hikes by the Federal Reserve.
"The strength of capital inflows is one reason why the dollar has appreciated versus most major currencies this year," he said.
"We think the dollar's days are numbered, however. We project that the Fed's tightening cycle will come to an end early next year. In contrast, we expect that many foreign central banks will continue to tighten policy through the course of next year. As interest rate differentials narrow, dollar assets will begin to lose some of their luster for foreign investors," Bryson said.
The euro started the day on a high after some strong confidence data out of Germany, the 12-state eurozone's biggest economy.
The influential Ifo Institute said its business climate index rose to 99.6 this month from 97.8 last month, against market expectations of a more modest increase to 98.1.
Analysts said the strength in the survey had reinforced expectations that the European Central Bank will raise the cost of borrowing in the single-currency zone on a gradual basis over the coming months.
In late New York trade, the US dollar managed a tiny gain to 1.2898 Swiss francs from SF1.2891. The pound was being traded at US$1.7724 after US$1.7645 late on Thursday.
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