The Dollar fell on Friday as an unexpected surge in the US jobless rate, 5.5% in May from 5% in April, revived fears of a deeper and more prolonged economic downturn, diminishing the prospects of Federal Reserve interest rate hikes by year-end. Pressure on the Dollar was also added by the dramatic jump in Oil prices to record highs. There are fears that soaring Oil prices could further damage the US economy, while simultaneously fanning inflation.

Also on Friday, European Central Bank officials appeared to leave little doubt that euro zone rates were set to rise next month, helping to set up the Dollar for its worst weekly loss versus the Euro since late March.

EurUsd climbed to a session peak of 1.5783, its best weekly gain since late March. It traded at 1.5782 late Friday, up 1.19%. GbpUsd rose 0.6% to 1.9704. UsdJpy fell 0.92% to 104.92, pushing away from a high of 106.34. UsdChf dropped as low as 1.0182, the weakest in six weeks. It last traded at 1.0186, down 1.86%. The Yen and Swiss franc tend to attract flows during periods of uncertainty as the countries' low interest rates reflect the capital surplus of their respective countries.

ECB President Jean-Claude Trichet sparked a Euro rally on Thursday when he flagged a July interest rate hike to quell inflation pressures. Trichet's remarks trumped Fed Chairman Ben Bernanke's attempt to talk up the Dollar two days earlier. On Friday, ECB officials reinforced Trichet's message about possible tighter monetary policy after the central bank kept its key refinancing rate at 4%.

US crude oil futures jumped more than $10 per barrel to $139.12 high per barrel, sending stocks on Wall Street tumbling around 3 percent. The drop in equities pushed the Dollar lower versus the Yen and Swiss franc.