The dollar jumped to a nearly seven-month high against the euro late Friday, undermined by renewed concerns about a Greek default and the surprise resignation of a European Central Bank official.
Juergen Stark, one of the ECB's policymakers, abruptly resigned three years before the end of his term. He is considered a "hawk" _ a policymaker who would be more likely to push for higher interest rates because of inflation worries.
"His sudden departure means there is one less person in the central bank to champion for tighter monetary policy and makes it ever clearer that the ECB will not be raising interest rates again this year," said GTF research director Kathy Lien.
The ECB has raised rates twice since April. Lower rates tend to make a currency, in this case the euro, less attractive to investors.
The head of the ECB had suggested that interest-rate increases were on hold on Thursday as the European debt crisis hurts the continent's economy.
Also weighing on the euro were rumors that Greece could default on its loans "as early as this weekend," Lien said. Another rumor circulating was that Germany was already preparing for a Greek default and putting together a plan to protect German banks that are exposed to Greek debt.
In late trading Friday, the euro fell to $1.3656 from $1.3891 late Thursday. Earlier, the euro fell to 1.3626, its lowest point since February 22. It has dropped more than 6 percent since late August as Europe's debt crisis, and fears of a Greek default, worry investors about the health of the larger euro bloc's economy and banks.
Also on Thursday, Fed Chairman Ben Bernanke failed to lay out more plans for aid to the U.S. economy, as many investors had hoped he would. Additional bond buying from the Fed, designed to support lending and pump money into financial markets, could drive U.S. interest rates lower. That might support the economy, but it tends to make the dollar less appealing to investors seeking big returns on their bets.
The dollar is also gaining more broadly. Some analysts said President Barack Obama's $447 billion plan to increase jobs could also help heal the economy, increasing demand for the dollar. Stock markets dropped, however. The dollar tends to gain on a safe-haven bid when stock markets are lower.
In other trading, the British pound fell to $1.5864 from $1.5967 late Thursday, while the dollar strengthened to 77.43 Japanese yen from 77.49 yen. The dollar also gained to 99.73 Canadian cents from 98.91 Canadian cents and rose to 0.8841 Swiss franc from 0.8747 Swiss franc.