The dollar fell sharply on Friday, suffering its biggest losses in months as a European plan to rescue banks fueled pent-up demand for riskier assets.
Crude oil surged back above $80 a barrel and the euro jumped more than 2 percent against its U.S. counterpart.
The European leaders meeting in Brussels for a two-day summit agreed to make use of Eurozone's bailout funds to recapitalize the region's banks directly once an effective single supervisory mechanism is established, relieving the governments of the burden of bailing out troubled lenders.
Earlier during the summit, the leaders approved a 120 billion-euro package to promote growth in the debt-stricken Eurozone as well as across the broader 27-nation European Union.
Meanwhile, U.S. personal incomes grew by slightly less than expected in May, according to figures released Friday by the Commerce Department.
The report said personal income increased by $25.4 billion or 0.2 percent in May, with disposable income increasing by the same 0.2 percent margin.
The dollar dropped to $1.2680 from near $1.2420 versus the euro, and plunged to $1.5690 against the sterling.
The buck managed modest gains against the safe haven yen, rising to 79.90.
by RTT Staff Writer
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