The dollar touched a one-month high against the yen on Friday after data underscored that the U.S. labor market was on the mend, while the Australian dollar fell after its central bank said interest rates were likely to stay on hold for some time.

The dollar was also supported by U.S. data the previous day showing new applications for unemployment benefits dropped to a 2- year low last week.

The euro remained under pressure after declines on Thursday, weighed down by renewed jitters about the euro zone debt crisis.

Any easy gains in the euro are susceptible to rapid reversal, said David Watt, senior currency strategist at RBC Dominion Securities.

Overnight, EU peripheral jitters reemerged ... the euro reacted as one might expect, it sold off from just over $1.37 to a low of $1.3577.

The euro last traded at $1.3559, down 0.3 percent from late U.S. trading on Thursday. Support is seen at around $1.3483, a level representing the 38.2 percent retracement of the January to February rally.

Traders said the European Central Bank stepped in to buy Portuguese bonds on Thursday after yields on the country's debt hit euro-era highs on a perceived lack of progress toward resolving the block's year-long debt crisis.

Against the yen, the dollar rose 0.3 percent to 83.50 yen on trading platform EBS, touching its highest level in about a month.

The dollar's rise against the yen came on a day when Japanese market players were away, with Tokyo financial markets closed for a national holiday.

The dollar index .DXY, which tracks its performance against a basket of major currencies, rose 0.2 percent to 78.425.

A trader for a major Japanese bank in Singapore said the dollar's broad gains against Asian currencies such as the South Korean won helped support the U.S. currency against other major currencies.

The dollar rose against the South Korean won after South Korea's central bank surprised market players by holding interest rates unchanged on Friday. A majority of analysts polled by Reuters had been expecting a 25-basis-point rate rise.

There was some unusually strong dollar-buying against Asian currencies and that helped lift the dollar broadly against other currencies as well, said the trader for a major Japanese bank in Singapore.

The trader said the People's Bank of China's decision to set a sharply weaker mid-point for the yuan on Friday also helped drag Asian currencies lower against the dollar.

The Australian dollar slid 0.7 percent to $0.9973, having come under pressure after Reserve Bank of Australia (RBA) Governor Glenn Stevens said the central bank was ahead of the game with past hikes and policy could be on hold for an extended period.