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 The euro spiked early to hit $1.4966, breaking the previous record of $1.4873, set the day before.
In morning European trading, the euro retreated slightly to $1.4924, still up from the $1.4833 it bought late in Europe the day before.
The dollar fell to 107.68 Japanese yen, dropping below the 108-yen level for the first time since 2005, down from 108.62 yen late in Europe on Thursday.
The British pound, meanwhile, rose to $2.0716, up from $2.0634 the day before.
The dollar dropped below 108.00 yen to 107.55 yen, its lowest since June 2005, before regaining some ground to 107.82 yen.
The U.S. Thanksgiving holiday weekend kept many traders on the sidelines, while Japanese financial markets were closed Friday for the Labor Thanksgiving Day holiday.
The euro, the pound and other currencies have been climbing steadily against the dollar since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.
The dollar has been further weakened by U.S. interest-rate cuts, which can be used to jump-start an economy, but can also weaken a currency as investors transfer funds to countries where they can earn higher returns.
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 The Federal Reserve has already cut rates twice and speculation is growing that as the subprime fallout continues, it will be forced into another cut.
The euro has been hitting new highs daily for the past week, and has started to raise concern among European businesses and governments.
German Chancellor Angela Merkel told N24 television on Thursday that the strong euro and high oil prices pose a risk to the country's economy
-- Europe's largest.
"We are pleased that Europe has a strong currency, but this obviously also creates problems for exports," she said.
Meanwhile, Airbus CEO Thomas Enders said the euro has now "crossed the pain threshold" and that the rate of the dollar's fall "hardly leaves room for reasonable adapting."
"That is life-threatening," he was quoted by Der Spiegel magazine as telling the company's work's council in Hamburg on Thursday.
Although the company is expecting a record number of orders, it still must reckon with "tremendous losses," he said.
[Associated Press; By DAVID RISING]
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