The dollar fell against a basket of currencies on Friday, falling from a three-week peak against the yen, as a steep drop in U.S. new-home sales raised doubts that the Federal Reserve will actually reduce its asset-buying program next month.
(Read more: Why the new homes plunge doesn't tell the full story)
An already buoyant euro hit $1.34 following the earlier release of U.S. housing data, with investors also selling the greenback against other currencies such as the Swiss franc and Australian dollar. The common currency last traded up 0.2 percent at $1.3377. The dollar also slipped 0.1 percent against a basket of six major currencies to 81.38.
The dollar traded 0.1 percent lower against the yen to 98.64 yen, after hitting a three-week high of 99.15 yen on the Reuters trading platform. The dollar is still heavily favored by investors over the yen this year.
Europe's common currency was also up 0.2 percent against the yen at 132.02 yen, after touching a one-month high of 132.42.
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