Stronger manufacturing data from China is pushing the euro to a seven-month high against the dollar.
Traders are also selling the dollar after a report showing US inflation is mild.
Chinese manufacturing has risen to a 14-month high in December, adding to signs the world's second-largest economy is recovering.
In the US, the Labor Department said on Friday its consumer price index fell 0.3 per cent in November from October, meaning inflation is still mild.
Traders took the data to mean the Fed will continue to keep interest rates low to boost the economy.
The euro rose as high as $1.3173 in afternoon trading on Friday, its highest point against the dollar since May 4.
The euro was worth $1.3075 late on Thursday.