The currency of the 13 euro nations, which have more than 317 million residents and account for more than 15 percent of global gross domestic product, surged as high as $1.4119 before falling back to $1.4083 by late afternoon, above the $1.4076 it bought in New York on Thursday.
The U.S. dollar fell further against the Canadian dollar after reaching parity for the first time since 1976 on Thursday. One Canadian dollar bought $1.0068 in U.S. currency at its highest point Friday before edging down to 99.95 U.S. cents in late New York trading, barely beating 99.93 U.S. cents late Thursday.
The Canadian dollar has experienced a summer of record highs on soaring crude prices and a strong economy. Retail prices, however, have yet to adjust, according to an economist at one of Canada's large banks.
Doug Porter, deputy chief economist at the Bank of Montreal, released a study Friday that indicates Canadians are paying roughly 24 percent more than Americans on identical goods despite parity in the U.S and Canadian dollars.
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Porter compared 17 goods sold in Canada and the U.S., finding that retail prices in Canada have not yet responded because most are set a year in advance.
In other trading, the dollar slid to $2.0200 against the British pound from $2.0099 late Thursday. It rose against the Japanese currency to 115.39 yen from 114.44 yen.
The dollar bought 1.1726 Swiss francs, up from 1.1717.
The American currency weakened sharply this week on the back of a decision by the U.S. Federal Reserve to cut its benchmark rate by a bigger-than-expected half point to 4.75 percent. The central bank was responding to market turbulence in the U.S. and elsewhere in the fallout from the subprime mortgage crisis.
"Furthermore, there are widespread expectations that the Fed will trim interest rates further over the coming months," said Howard Archer, the chief U.K. and European economist for Global Insight. "In contrast, the European Central Bank still retains a clear bias toward raising interest rates further, despite shelving its original plans to act at its September meeting due to the current uncertainty and turmoil in global credit and financial markets."
Lower interest rates, used to jump-start the economy, can also weaken a currency. Investors can get greater returns from countries with higher interest rates, so money flows to investments in those countries' currencies. Also, foreign investors in a currency that is losing value get relatively lower returns when they cash in their stocks and bonds.
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The ECB kept its benchmark rate unchanged at 4 percent at its Sept. 6 meeting and the Bank of England is expected to keep its rate steady at 5.75 percent when it meets next month.
As the dollar weakens against the euro, it could dampen European exports to the United States, making European-made products from automobiles to consumer appliances more expensive for American buyers. It also makes European vacations more expensive for visitors from the U.S.