Euro zone growth numbers on Friday topped forecasts and helped push the to a nearly three-week peak against the dollar as investors bet action to avert deflation by the European Central Bank next month was less likely.
The single currency rose as high as $1.37 after slightly stronger-than-expected growth in Germany and France pushed euro zone fourth-quarter GDP up 0.3 percent, above a forecast of 0.2 percent.
The dollar was weak after softer-than-forecast U.S. data on Thursday and traded lower on Friday even after a better-than-expected report of American consumer sentiment.
The dollar index on Friday slid to a low near 80.07, its lowest since the start of the year, and was last just below 80.20, down almost 0.2 percent. The dollar was down nearly 0.3 percent against the yen near 102 yen.
The euro zone data is likely to help reduce expectations that the ECB will cut interest rates at next month's meeting, after President Mario Draghi last week declared more information was needed before deciding on any action.
This week ECB Executive Board member Benoit Coeure said the idea of cutting the rate the ECB pays banks to hold their deposits overnight into negative territory was "a very possible option'".
The Australian dollar was in focus after it dropped one full U.S. cent on Thursday in the wake of surprisingly weak labor data. It rebounded on Friday, gaining 0.5 percent to $0.90 with help from data out of China that showed consumer prices rose 2.5 percent in January, broadly in line with expectations.
China is Australia's main export market and the Aussie dollar is often used as a liquid proxy for investor bets on the Chinese economy.
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