The dollar rose sharply against the euro after Spain warned that its budget deficit would be worse than previously expected.
The dollar also rose against the Japanese yen, hitting a nine-month high early Friday. The yen has been weakening against the dollar since the Bank of Japan announced a surprise increase of its economic stimulus program in February.
The euro fell to $1.3204 in afternoon trading from $1.3316 late Thursday. The dollar rose to 81.81 Japanese yen from 81.08. The dollar rose as high as 81.725 Japanese yen, its highest point since May 31.
Spain said its budget deficit will reach 5.8 percent of economic output this year, much higher than the 4.4 percent the country had promised to the European Union. Spain's new deficit target defies the E.U.'s newly signed treaty that to aims to limit government overspending in Europe.
The European Commission will have to either back off its demands for deficit cuts or sanction Spain.
In other trading Friday, the British pound fell to $1.5832 to $1.5953. The dollar rose to 0.9136 Swiss franc from 0.9059 Swiss franc and to 98.81 Canadian cents from 98.57 Canadian cents.