The dollar came under pressure Friday afternoon as the euro recovered and the yen whipsawed in reaction to a major earthquake in Japan overnight.
Hopes that the European Union could work out a plan to end the region’s sovereign debt crises prompted some late buying of the euro.
The dollar touched a 10-day high of $1.3750 early in the day, when it appeared Ireland and Germany were at a stalemate over fiscal policies in the wake of a recent bailout for Dublin.
However, the buck fell sharply from there, slipping back to $1.3880 by lunchtime in New York.
The EU will issue a declaration of support for Portugal, Ireland and Greece, according to French paper Le Monde.
Portugal announced new measures to get spending in check, hours after data revealed the Portuguese economy contracted sequentially in the fourth quarter of 2010.
The dollar plunged against the yen, wiping out a week’s worth of gains. The pair was at Y81.80, not far from November’s 15-year low of Y80.22.
A tsunami generated by an 8.9 scale earthquake slammed Japan’s eastern coast Friday, and was headed for the West Coast of the U.S.
The dollar held most of its weekly gains against the sterling. After hitting a monthly high of $1.5976, the dollar leveled off to $1.6050.
In economic news from the U.S., retail sales expanded for the eighth straight month in February, according to figures released by the Department of Commerce on Friday.
Total retail sales came in at $387.1 billion in February, up 1 percent from January, precisely the increase that most economists had expected.
Meanwhile, New York Fed President William Dudley continued to downplay the impact of inflation, suggesting that the effects of rising food and energy prices are likely to be temporary.