The single currency strengthened broadly on Thursday as data from Europe signaled the worst of the recession in the region may be over. Economic reports from Europe showed the manufacturing index rose to 36.7 from 33.9 in March, while the services index increased to 43.1 from 40.9. The euro rallied thereafter and rose to session highs of 1.3162, 129.00 and 0.8999 versus the dollar, Japanese yen and British pound in New York trading.

Meanwhile, the greenback went under pressure as weak U.S. data indicated the labor market continues to deteriorate and housing market may remain depressed for much of the year. In late New York session, the ICE future dollar index traded down 1.09 percent at 85.360, while the U.S. dollar dropped lower against the yen, Swiss franc, British pound, Australian dollar and New Zealand dollar to around 97.70, 1.1502, 1.4745, 0.7158 and 0.5625 respectively.

In other currency, the Canadian dollar rose sharply against the greenback on Thursday and touched a session high of 0.8181 after the Bank of Canada laid out a broad framework for unconventional stimulus measures (including purchasing financial assets in the market, or quantitative easing, and rescuing private-sector credit markets, or credit easing) but it said it needed to be prudent and would not be taking any such steps immediately.

On the data front, the initial jobless claims increased 27,000 last week to 640,000, while total benefit rolls rose 93,000 and reached a record of 6.14 million. A separate report later in the day showed sales of U.S. previously owned homes fell in March, decreased 3 percent to an annual rate of 4.57 million, lower than the consensus forecast of 4.65 million and from 4.71 million in February

On Friday, economic data releases include Japan all industrial index and Corp Service Price, German Ifo business climate index, U.K. gross domestic price and retail sales, and U.S. durable goods and new home sales. At 12:00GMT, U.S. Treasury Secretary Timothy F. Geithner will host a G7 Finance Ministers and Central Bank Governors meeting followed by a G20 ministerial meeting.