The dollar hit a seven-month high against the euro and set three-month peaks against the Swiss franc and sterling on Friday after recent robust data raised optimism about the US economy. Upbeat retail sales data on Thursday followed a surprisingly strong jobs report last week, reassuring the market that US interest rates would continue to rise at a steady pace. In addition, news this week of an unexpected narrowing in the US trade deficit in March reduced worries about structural imbalances in the world's largest economy. "The dollar's cyclical story is back in full boom. I can see the euro/dollar testing $1.25 in the next week or two," said Adam Myers, currency strategist at Societe Generale.
The dollar hit its highest since mid-October at $1.2623 per euro. It rose a third of a percent on the day to $1.2626 per euro by 1130 GMT, bringing this year's gain to more than six percent. It hit highs of 1.2243 Swiss francs and $1.8552 per sterling.
The greenback also pushed to 107.23 yen for the first time in almost a month.
The University of Michigan's preliminary consumer sentiment index for May is due later on Friday.
US retail sales in April surged 1.4 percent on the month, up from March's upwardly revised 0.4 percent increase and overshooting expectations for a 0.7 percent rise. It was the strongest result in seven months.
"There was a period when we had quite a weak run of US data. At that time people thought the Fed would slow down the pace of interest rate hikes. Now more recent data that has come out eased concerns about a soft patch in the economy," said Johan Javeus, foreign exchange strategist at SEB in Stockholm.
A series of interest rate rises by the Federal Reserve has helped the dollar rebound against other major currencies this year after it tumbled 30 percent in the previous three years on worries about growing US current account and budget deficits.
The Fed has raised its funds rate by a quarter of a percentage point at each of eight consecutive meetings, bringing it to three percent. Its next meeting is in June.
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