The dollar lost ground on Friday after a stronger than expected German business sentiment survey boosted the euro, but thin pre-holiday trade made moves erratic.
Germany's closely watched Ifo business climate index rose to 96.2 in December, its highest level since April and above all forecasts. A poll of 26 economists had predicted a fall to 93.8.
"It's a high profile release and a good forward looking indicator. On a quiet day all eyes on were on Ifo and we did get an upside surprise," said Daragh Maher, senior currency strategist at Calyon.
"It gave an extra boost but I don't think it means that euro zone data will become a new driver for the market," he added.
The dollar's losses were not confined to the euro. It slipped against the yen and sterling, which was still riding high after better than expected retail sales data earlier in the week.
The dollar fell as low as $1.3316 per euro but was still 1-1/2 cents away from last week's record low of $1.3470. By 1030 GMT, the dollar stood at $1.3300 per euro, down over a third of a percent from late New York levels.
The dollar stood at 104.15 yen, down around half a percent on the day. The pound traded as high $1.9449 but still a cent off Thursday's 12-year high of $1.9550.
"We've seen speculators actually increase short dollar positions over the past two days or so," said Aziz McMahon, foreign exchange strategist at ABN AMRO.