The euro powered above 92 US cents for the first time in almost five months as the dollar was battered by rising fears of a possible hard landing for the US economy.
The euro pushed as high as $0.9254 in the last trading session before the Christmas break as the market continued to digest US figures indicating the world's largest economy was faltering after years of robust growth. The currency closed at $0.9231 compared with $0.9145 a day earlier.
The euro was also stronger against the Japanese currency, buying 104.05 yen from 102.81 overnight in New York. The dollar was up against the yen at 112.75 yen compared with 112.20 in New York.
The euro has now gained more than 12 per cent since it fell to a record low of $0.8230 in late October. It remains 22 per cent lower than its high-water mark, hit soon after its introduction in January 1999.
The principal reason for its revival has been a reassessment of the state of the US economy, after an unprecedented chapter of uninterrupted, buoyant growth that has driven the world economy forward.
Recent figures have suggested anything from a surprising slowdown to a bumpy landing for the world's largest economy, prompting investors to flee the dollar-zone for safer havens.
On Thursday, fresh data showed that US growth slowed to 2.2 per cent on an annual basis in the third quarter - meaning that the 11-nation euro zone economy has overtaken its US counterpart, for the time being at least.
"The news gets no better for the dollar," said BNP Paribas analysts in their daily research note. "Another series of soft US economic reports reaffirmed the increasingly difficult backdrop for the dollar."
"It's a dollar phenomenon, and the euro is the main beneficiary," said Mr Mitul Kotecha, global head of currency research at Credit Agricole Indosuez. "The trend we're seeing now looks solid and is likely to continue next year."
Analysts were also digesting the nomination of Mr Paul O'Neill as US President-elect George W. Bush's choice for Treasury Secretary.
Though the Bush administration is expected to be in favour of a strong-dollar policy, Mr O'Neill's previous incarnation as chief executive of aluminium giant Alcoa could render him sympathetic to calls from manufacturing exporters for a slightly softer currency.
