The dollar slumped badly on Friday amid growing speculation that Europe can avoid the sovereign debt crisis that had earlier cast doubt sustainability of a continental currency.

A mixed batch of data on the US consumer kept the dollar from extending its steep early losses.

Still, with the dollar falling through support to a more than one year low against its Canadian counterpart, it would seem that February's strength has turned into March weakness.

While official retail sales data suggested that consumers are coming back to life, Reuters and the University of Michigan released a separate report showing deterioration in consumer sentiment in March.

US Retail sales unexpectedly showed a modest increase in the month of February, according to a report released by the Commerce Department on Friday.

The report showed that retail sales rose by 0.3 percent in February following a downwardly revised 0.1 percent increase in January.

Later, Reuters and the University of Michigan's reading on the consumer sentiment index for March fell to 72.5 from February's final reading of 73.6. Economists had expected the index to edge up to a reading of 74.0.

The dollar slipped to a monthly low of 1.3760 versus the euro today, edging further away from a nine-month high near 1.3440, set earlier this month.

The buck also weakened against the sterling, slipping to 1.5150.

Parity is right around the corner for the dollar versus its Canadian counterpart. The buck slipped to C$1.0154, its lowest level since August 2008.

Conversely, the buck held its ground against the yen as both safe haven currencies suffered today. The pair remained above Y90.

Canada's unemployment rate edged lower in March as the economy created nearly 21,000 jobs, fueling expectations that policy makers in Ottawa will raise interest rates sooner than previously expected.

Employment rose by 20,900 in February, with large gains in full-time work partly offset by losses in part time, according to data released Friday morning by Statistics Canada.

The unemployment rate edged down 0.1 percentage points to 8.2% in February.