The dollar edged closer to a two-month high against the euro Friday as investors digested decisions by the European Central Bank and Bank of England to keep their respective interests unchanged.
The euro bought $1.2820 in morning European trading, down from $1.2855 late Thursday in New York, putting it near the $1.2800 mark it was last at in mid-March. The pound fell to $1.8692 from $1.8700 late Thursday in New York after the Bank of England decided to keep its interest rate steady at 4.75 percent.
The dollar held up against the Japanese yen as surprisingly positive data about Japan's economy failed to erase growing bullish sentiments about the U.S. currency. The dollar was trading at 108.64 yen, up from the 108.61 it bought in New York late Thursday.
The dollar extended its gain against the euro in the wake of the ECB decision Thursday to keep its refinancing rate at 2 percent, a mark it has been at since June 2003. The bank signaled it's unlikely to raise interest rates soon, but warned about high oil prices.
Though the dollar is regaining some ground, the euro is still extremely strong, having shot up from around $1.20 in September on deep worries about the massive U.S. trade and budget deficits.
The recent advances for the dollar have come on expectations that the U.S. Federal Reserve will continue to raise interest rates this year. Expectations of higher U.S. rates tend to make securities denominated in dollars more attractive.
Markets are now looking ahead to next week, when the United States will release new trade data.