The U.S. dollar dropped slightly against the euro Friday as markets awaited key economic reports from the United States and reacted to falling optimism by Japanese business.
The euro bought US$1.2973 in European trading, up from US$1.2958 in New York late Wednesday. The British pound fell slightly to US$1.8866 from US$1.8898.
The dollar rose slightly against the Japanese yen, climbing to 107.22 yen from 107.18 yen.
The U.S. currency recovered against the yen after a closely watched survey showed Japanese business sentiment was deteriorating.
A quarterly survey by the Bank of Japan, called the "tankan," found that large Japanese manufacturers are becoming less optimistic about their business outlook -- underlying growing worries about the fragility of the nation's economic recovery.
A negative outlook on the Japanese economy tends to push the dollar higher against the yen.
Later in the day, the Unites States was to release its March unemployment report. U.S. non-farm payrolls are expected to have increased by 225,000 in March, after the economy created 262,000 new jobs in the previous month.
On Thursday, the U.S. Labor Department said the number of Americans filing new claims for unemployment benefits rose by 20,000 to 350,000 last week. It was the highest level in 11 weeks. Separate data showed that Americans' incomes rose by 0.3 percent in February, while consumer spending climbed by 0.5 percent.
Worries about the wide U.S. trade and budget deficits sent the euro surging to an all-time high of US$1.3667 at the end of December. While those concerns remain, the dollar has stabilized this year.
The currency enjoyed a rebound last week after the U.S. Federal Reserve raised interest rates by a quarter point and issued a hawkish statement on stronger inflationary pressures -- suggesting it may boost rates further throughout the year. Higher U.S. interest rates tend to help the dollar by making assets denominated in the currency more attractive to investors.