The euro fell to a two-week low against the dollar on Friday, extending losses to a fifth day as slowing euro zone inflation raised expectations of a European Central Bank rate cut by the end of the year. With a rate cut seen eroding the euro's interest rate advantage over other major currencies, the currency was on track to notch its biggest weekly loss against the dollar since the week ended July 6, 2012.
The euro fell as low as $1.3478 in late-morning New York trade, its lowest since October 16. It was last down 0.7 percent at $1.3484 after having fallen 1.1 percent on Thursday, its biggest one-day drop in more than six months. The euro at current levels is poised to end the week 2.3 percent lower, but it remains higher on the year, up 2.2 percent. The dollar index, which measures the greenback against a basket of six major currencies but is dominated by the euro, rose 0.7 percent to its highest since mid-September at 80.767 , far above a nine-month trough of 78.998 plumbed a week earlier. Against the yen, the dollar reached a two-week high at 98.84 yen and last traded up 0.4 percent at 98.74, according to Reuters data.