US markets will be closed on Monday for the Presidents Day holiday.
The US currency traded flat against the Swiss franc at 1.1830 francs. Sterling was also little changed at $1.8940.
"We had a mixed bag of data - PPI (producer price index) was much higher than expected. That was supposedly dollar-supportive, but it hasn't really been," said Joe Francomano, vice president of foreign exchange at Erste Bank in New York.
Francomano was referring to the US producer price report, which showed an unexpected jump in core inflation, suggesting increased chances of higher interest rates. The PPI number, which measures prices received by farms, factories and refineries, dragged the euro to session lows around $1.3012.
Higher inflation in the United States could step up pressure on the Federal Reserve to raise interest rates. That should boost the greenback's prospects, as higher interest rates tend to increase the attraction of short-dated dollar deposits to foreign investors.
Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York, said that from a technical view, "markets are slightly bullish on the euro, with traders trying to test the key $1.31 resistance in euro/dollar."
The dollar got a flood of bids after core PPI, which strips out volatile food and energy prices, shot up 0.8 percent, the largest gain since December 1998.
"This is a positive thing for the dollar, not that inflation is good for the dollar. But the Fed could respond by becoming more restrictive and that would support the dollar," said Kenneth Landon, global foreign exchange strategist at JP Morgan Chase in New York.
The annual increase in the core PPI advanced to 2.7 percent, signaling mounting pressure from import prices.
The dollar hit a three-month high against the euro earlier this month after hopes for gradual US interest rate hikes lifted the greenback from December's record lows versus the European currency.
But analysts have mixed views about the dollar's near-term direction, depending on whether their focus is on current account imbalances or economic fundamentals.
Barclays Capital's Englander said comments by Fed Chairman Alan Greenspan on the prospect of shrinking the US current account also weighed on the dollar this week and could continue to do so.
"He was very cautious on prospects for improving the deficit. I think that left a negative dollar overlay on the market," he said.