The euro shot above $1.31 earlier today for the first time since April 2005, extending sharp gains made this week sparked by a number of factors favourable to the single currency.
Positive German economic figures and comments from central bankers have reinforced expectations of higher euro zone interest rates going into next year, while there have also been signals that Asian countries are considering moving some of their reserves out of the US currency.
Earlier on Friday the euro had risen to its highest in 19 months against the dollar, at $1.3109, a little more than 5 cents away from a record high set in late 2004. Late on Friday evening, it had pared some gains to trade at $1.3098, up 1% from Thursday.
The ECB is expected to raise interest rates next month to 3.5%, boosting the euro's appeal. The Federal Reserve is expected to hold rates steady for some time.
Investors are wary that China, which holds the world's biggest foreign exchange reserves of more than $1 trillion, might diversify out of dollar assets. Such speculation helped the euro rise to a record high above $1.36 in late 2004.
