The euro fell further from recent 7-month highs versus the dollar and record levels against the yen on Friday after the head of the European Central Bank on Thursday poured cold water on market expectations of a May rate hike.
But the single currency kept to a tight range ahead of US payrolls data which investors will scrutinise for clues on how much further the Federal Reserve could tighten credit.
ECB President Jean-Claude Trichet surprised investors when he said the ECB disagreed with markets which had priced in a 100 percent probability of a rise next month, after the bank kept rates steady at 2.5 percent on Thursday.
This triggered a sell-off in the euro, but clear hints by the ECB chief that another rate rise could come in June reassured investors that they were not wrong to expect the bank's gradual monetary tightening to continue.
"It's been fairly quiet today and I think that's just been basically a consolidation after the Trichet comments yesterday and before the payroll number," said Naeem Wahid, currency strategist at HBOS Treasury Services.
"So the market is just sitting there waiting for the number to come out and I think if it's a strong number we could see the euro fall a little further."
By 1134 GMT, the euro slipped 0.37 percent on the day to $1.2178, off a seven-month peak of $1.2333 hit before the ECB's remarks on Thursday. It was down 0.33 percent at 143.47 yen, having hit 144.92 on Thursday, its highest level since the launch of the single currency in January 1999.
The dollar was steady at 117.80 yen.
"May rate hike expectations were so high but Trichet disappointed the market. We are seeing the correction from a strong move to $1.23," said Antje Praefcke, currency strategist at Commerzbank in Frankfurt.
Economists in a Reuters poll expect the non-farm payrolls data to show a gain of 190,000 jobs in March, compared with an increase of 243,000 jobs a month earlier. The unemployment rate is forecast to hold steady at 4.8 percent.
The numbers could provide key insight into the health of the US economy.
Recent comments by Fed officials have fuelled speculation that the end of a nearly two-year long tightening policy could be in sight, putting pressure on the dollar. The Fed has raised rates 15 times since mid-2004, pushing its funds rate to 4.75 percent.Adding to the dollar's woes, Chicago Fed President Michael Moskow said on Thursday the United States faces a risk that Asian central banks which are still hungry for US assets will one day reach their limit and reinvest at home.
Talk of diversification out of dollars in Asia and the Middle East had put an extra burden on the dollar earlier this week.
Nevertheless, the dollar was seen firmly supported between 115.50 and 119.50 yen - a range for the past two months that most traders think will persist into the near future.