The dollar firmed on Friday to post an eighth straight month of gains against the yen as upbeat U.S. economic data reinforced the view that the Federal Reserve could pare back its monetary stimulus sooner than expected.
The euro, meanwhile, fell against the dollar and yen, hurt by euro zone data showing record-high unemployment and low inflation.
In contrast, U.S. consumer sentiment rose to its highest in nearly six years in May while business activity in the Midwest picked up this month after contracting in April. The stronger-than-expected data offset an earlier report showing subdued inflation and a drop in consumer spending.
"The dollar is well bid today because of the U.S. data, which corroborates expectations that the Fed may have to taper its quantitative easing program soon," said Greg Moore, currency strategist at TD Securities in Toronto. Moore said TD's house view is that the Fed would begin to reduce its asset purchases around the fourth quarter of this year.