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The euro was pummeled yet against versus the resurgent US dollar, plunging to its lowest level since last July on growing fears about the debt crises facing Greece and Portugal.
Additionally, better than expected US growth figures bolstered the dollar, which was already on the rise due to its status as the world's safe haven currency.
European Union officials insist there won't be a bailout for Greece, and Prime Minister George Papandreou said in Davos yesterday that the nation is determined to cut the massive 12.7 percent budget deficit that has been weighing on the euro for the past month.
Meanwhile, a flash estimate from the Eurostat showed that consumer price inflation in the euro area inched up to 1% in January from 0.9% recorded in December, giving the European Central Bank plenty of room to maintain or expand measures to kickstart the sluggish euro area economy. Economists had forecast the rate to rise to 1.2%.
U.S. economic activity expanded for the second consecutive quarter in the final three months of 2009, with the pace of gross domestic product growth far exceeding economist estimates.
A preliminary report released by the Commerce Department showed that gross domestic product increased at an annual rate of 5.7 percent in the fourth quarter compared to the 2.2 percent growth seen in the third quarter.
The euro extended its steep decline versus the dollar, dropping to 1.3874. With the loss, the euro moved further away from the 15-month high above 1.51 set back in November.
At the same time, the euro stayed near a 9-month low of 124.80 versus the yen.
Bank of Japan Governor Masaaki Shirakawa said on Friday that the central bank is ready to take swift, bold action if financial markets become unstable again.
Shirakawa's comments come after official data showed that consumer prices fell for the tenth straight month. The central bank has already pledged to tackle deflation, vowing that it "would not tolerate" consumer prices at, or below, zero.
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