The U.S. dollar fell versus major rivals Friday, with the euro breaking through important chart resistance after a stronger-than-expected rise in industrial output.

The Japanese yen also strengthened versus the dollar, after initially losing ground in Asian hours after Japanese Prime Minister Yukio Hatoyama told parliament the yen was too strong.

The dollar index (DXY), which measures the U.S. unit against a trade-weighted basket of six major currencies, slipped to 79.806 from 80.542 late Thursday.

But U.S. retail sales data for February is likely to be the main event, said strategists at Brown Brothers Harriman. The data, due for release at 8:30 a.m. Eastern, is expected to show no change in February after a 0.5% increase in January, according to the median forecast of economists surveyed by MarketWatch.

The BBH strategists said risks run to a stronger-than-expected rise on retail data given weekly retailer reports over recent days, as well as the stronger-than-expected February jobs report released last week and firm ISM surveys.

Traders will also be watching consumer confidence and business inventories data set for release later in the day.

The euro rose to $1.3779, up from $1.3680 late Thursday, and the British pound was changed hands at $1.5168, compared with $1.5063. The dollar traded at 90.35 Japanese yen, down from 90.50 yen in late North American trading Thursday.

The euro traded as high as $1.3796, taking out resistance at the $1.3770 to hit its highest level versus the dollar since mid-February. The single currency got a boost from data showing industrial production in the 16-nation euro zone posted a record 1.7% monthly jump in January.

Despite ongoing strikes in Greece, ideas that the Greek government's austerity measures and vague commitments by European leaders to provide support for Athens have soothed worries over the country's ability to meet its debt obligations, said Michael Hewson, analyst at CMC Markets.

The euro, meanwhile, dropped to a one-month low versus the Swiss currency at 1.4578 francs as traders appeared to test the Swiss National Bank's resolve to prevent a rapid appreciation of the franc versus the single currency. The euro traded at 1.4597 francs in recent action, a loss of 0.1%.

The SNB on Thursday reiterated its commitment to stemming "excessive" appreciation of the franc.

The Canadian dollar strengthened versus its U.S. counterpart after data showed Canada's jobless rate fell to its lowest level since April 2009.

Canada's statistics agency said the unemployment rate fell to 8.2% in February from 8.3% in January, while a net 20,900 new jobs were created. The U.S. dollar changed hands at C$1.0175, a fall of 0.6%.

The yen weakened in Asian trade, with the dollar changing hands at 90.67 yen, after Hatoyama said during a session of the Upper House budget committee Friday that overseas financial crises "have brought about a strong yen that we don't believe reflects the fact that Japan's economic and industrial conditions aren't strong enough," according to Dow Jones Newswires.

Hatoyama said, "I think we need to take firm steps against such yen strength," but didn't specify any steps. Explicit references by top leaders to the currency's strength are uncommon.

Also Friday, a report in Japanese business daily Nikkei said the Bank of Japan's discussions on additional monetary easing at a two-day policy board meeting starting Tuesday will likely focus on a proposal to double the scale of a lending facility introduced in December.

Meanwhile, analysts warned that the yen could see strength in coming weeks as Japanese companies begin repatriating overseas earnings ahead of the end of the fiscal year in March.

Copyright © 2009 Dow Jones Newswires