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The dollar fell on Friday and was set for its steepest weekly slide against a basket of major currencies in two months, as record high oil prices left the U.S. economy vulnerable to slower growth and rising inflation.
The euro [ EUR-TN 
+ (+0.00%) ], by contrast, remained on a solid footing despite data showing tepid growth in the euro zone's services and manufacturing sectors. Analysts said that despite the slowdown, the economy was robust enough to allow the European Central Bank to focus on restraining price pressures.
"We had a massive shift generally in the past couple of weeks and the market now sees the ECB hiking rates," said Marcus Hettinger, FX strategist at Credit Suisse in Zurich.
"Consumers in the U.S. are already under stress from housing, and now...we have rising oil prices. Basically it means interest rates will remain low in the U.S. despite rising inflation...and that's one of the reason why the dollar will remain weak," Hettinger said.
Against a basket of six major currencies, the dollar was down 1.2 percent on the week. If that holds, it would be its biggest weekly decline since late March.
The euro was up 0.3 percent at $1.5780 , off a one-month high of $1.5814 touched on Thursday. On the week, it rose 1.2 percent, the most since March. The dollar fell 0.8 percent to 103.20 yen [ JPY-TN + (+0.00%) ].
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