The dollar on Friday slumped to its lowest level versus the euro this year with the US currency losing its safe-haven status amid increasing signs of economic recovery, traders said. In London trade, the European single currency spiked to 1.4106 dollars -- the highest point since December 31 -- compared with 1.3943 dollars late in New York on Thursday. Against the Japanese currency, the dollar fell to 96.34 yen from 96.77 yen late Thursday. Markets are looking ahead to US economic growth data due Friday, with analysts expecting gross domestic product to have fallen 5.5 percent in the first quarter rather than an initial estimate of 6.1 percent. Data on Thursday showed an unexpectedly strong 1.9 percent increase in US durable goods new orders in April and new US unemployment claims fell to 623,000 in the past week, a better reading than forecast by most analysts. The data "didn't dent hopes of an economic recovery in the second half of the year," said analysts at NAB Capital. Earlier Friday, dealers digested news that prices in the eurozone stagnated in May over one year for the first time since records began. The Eurostat estimate put 12-month inflation in the eurozone -- numbering 16 nations since this year -- at 0.0 percent in May, the lowest point since 1996. IHS Global Insight analyst Howard Archer said the data coupled with the prospect of prices falling in the coming months on an annual basis may cause the European Central Bank (ECB) to cut interest rates to new lows. "The ECB has ample scope to keep interest rates down at 1.00 percent for an extended period and to even cut them further should there be any faltering in the current mounting signs that the rate of eurozone economic contraction is slowing substantially," said Archer. The yen meanwhile firmed against the dollar and euro on Friday after better-than-expected Japanese industrial data fanned hopes for an economic recovery, traders said. Japan's industrial output in April jumped 5.2 percent from the previous month. It beat market expectations for an increase of around 3.3 percent, sparking hopes of a recovery. In London trade on Friday, the euro was changing hands at 1.4106 dollars against 1.3943 dollars late on Thursday, at 134.92 yen (135.00), 0.8723 pounds (0.8742) and 1.5146 Swiss francs (1.5114). The dollar stood at 96.34 yen (96.77) and 1.0814 Swiss francs (1.0838). The pound was at 1.6058 dollars (1.5943). On the London Bullion Market, the price of gold benefited from a weak greenback, rallying to 974.39 dollars an ounce from 957.75 dollars an ounce late on Thursday.

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