The euro bought $1.3412, down less than 0.1% from $1.3445 on Thursday. The British pound fell to $1.728, just slightly lower than the $1.73 it bought the previous day.
The dollar also edged a bit lower against the Japanese yen Friday, down 0.02% to ¥101.65 from ¥101.68 on Thursday.
The greenback's respite follows weeks of tumultuous ups and downs, coinciding with wild swings in the stock market, ever-tightening credit and more signs that the U.S. economy is entering a recession.
A major housing indicator showed initial construction of homes plunging to another 17-year low, which pushed the dollar slightly lower against the yen.
The yen typically increases when investors show aversion to risk, as many traders view it as a more stable currency in times of economic turmoil.
Wall Street also appeared to be taking a break from the recent daily roller-coaster moves, leaving currency traders anxious over what might be the next shoe to drop for the economy.
"Currency volatility has been very high recently, which means that there are a great number of fundamentals at play," said Antonio Sousa, chief currency strategist with Forex Capital Markets. "There may be a small pullback today, but that doesn't mean tomorrow won't be more volatile."
The recent fallout from the credit crisis is sending traders searching for a safe haven. With the dollar still considered a relatively steady currency, many choose to invest in U.S. Treasurys and dollars.
"The biggest credit bubble in history is bursting, and it's affecting the entire global financial system," said Sousa. "The U.S. dollar is considered the world's reserve currency, so it has received help from the recent flight to quality."
But with stocks falling and oil prices tumbling, the dollar may face some trouble ahead. Economists are worried about deflation - falling prices for U.S. consumer products - which many say could have disastrous effects on the dollar's global status.
"Deflation could bring the dollar away from its world-reserve status," Sousa said. "The U.S. is able to borrow so much from other governments now, but if the greenback loses its status, that would be threatened, and we may see a sharp depreciation of the dollar."
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