Rising business optimism in Germany drove the euro to a two-week high against the dollar Friday.
A closely-watched index of business sentiment in Europe's biggest economy unexpectedly rose Friday. Economists expected a small decline. Traders took it as a sign that the German economy is recovering.
The euro rose to $1.3215 late Friday from $1.3130 late Thursday. The euro rose as high as $1.3224, its highest point against the dollar since April 3.
The euro fell earlier in the week after the Bank of Spain said that the amount of bad loans on the books at Spanish banks rose to an 18-year high in February. Spain has become the new focus of Europe's ongoing debt crisis following a successful debt restructuring by Greece. But the euro recovered after stronger investor demand at a Spanish bond auction eased fears. The euro is up 1 percent against the dollar this week.
In other trading, the British pound rose to $1.6106 from $1.6055. The dollar fell to 0.9092 Swiss franc from 0.9156 Swiss franc.
The dollar rose to 81.58 Japanese yen from 81.46 yen.