The dollar was on its way to its largest weekly gain versus the euro since June 2006 on Friday amid speculation that the European Central Bank will lower interest rates to boost a slowing economy.

The euro has weakened 2 percent this week as a result of expectations that effects of the slowing U.S. economy will extend to Europe. In recent weeks, the Federal Reserve has moved aggressively to lower borrowing costs as the U.S. faces tighter credit in the financial and housing markets.

The dollar had dropped to record lows during the crisis but has reversed course this week.

On Wednesday, ECB President Jean Claude Trichet sent the euro lower after pointing downside risks for the euro-zone's economy, suggesting that a rate cut could be on the way. Inflation in Europe has surpassed 3 percent, above the bank's 2 percent target rate.

Trichet, as recently as two weeks ago, had emphasized the central bank's role in fighting inflation, leading some to consider that the bank would keep rates steady.

The euro is down more than 2 percent this week. However it rose today to $1.4511 at 3:40 p.m. in New York, from $1.4485 yesterday. It rose as high as $1.4546 after reports that OPEC may switch from the dollar to the euro for pricing oil.

Yesterday, the Bank of England lowered interest rates citing an economic slowdown in the U.S. and trouble in financial markets. The pound dropped to $1.9452 per pound from $1.9437 late Thursday.

The dollar was flat at 107.38 yen.