The dollar gained on the euro as investors turned to the greenback as a safe haven amid fears of a looming financial credit crunch.
The euro was worth €1.3636 late on Friday, down from $1.3743 in New York on Thursday.
Analysts said that investors, anxious that a credit squeeze brought on by a sharp deterioration in the key US housing market was about to materialise, were dumping shares for a second day in a row.
Analysts are concerned that the faltering US housing sector will hurt banks and finance companies enough to curb the availability of credit on which the economy feeds.
That, in turn, could hurt private equity groups because their takeover bids are often financed by large amounts of bank debt.
Under such circumstances the dollar was finding favour as a safe-haven currency, notably as investors fear that weakness in the US subprime market, where defaults were rising on loans made to people with uncertain credit histories, could spread to Europe and elsewhere.
The dollar eased a bit at one point Friday after a larger than expected fall in core US inflation offset a robust set of second quarter GDP figures.
Lower inflation suggests that the US Federal Reserve will not raise interest rates, thereby putting downward pressure on the US currency.
