The bump up follows a long decline for the dollar, which hit multi-year lows against several currencies earlier this week.

The dollar has fallen because of the Federal Reserve’s signals that it will keep rates low for at least the next few months in order to support the economy.

Other central banks around the world are raising rates to counter rising food and energy prices. Higher rates tend to support currencies.

On Friday, however, investors got some evidence of momentum in the U.S. economy after a recent run of weak data. The government said 244,000 jobs were added in April. Private employers added 268,000 jobs, the most since February 2006. But the jobless rate rose to 9 percent from 8.8 percent the previous month as more people looked for work.

“The firming in the labor market has to be a major topic of conversation at the Fed,” said Joel Naroff of Naroff Economics in a research note. “More and more it is looking as if the recovery is on track despite the headwinds it is facing, and the FOMC will have to deal with that trend.” The FOMC, or the Federal Open Market Committee, is the Fed panel that sets the country’s interest-rate policy.

In late trading Friday in New York, the dollar built on recent gains against the euro after the U.S. currency’s steep 10 percent decline this year. The euro tumbled to $1.4337 from $1.4530 late Thursday — a huge drop from its peak of $1.4942 on Wednesday. That was the euro’s highest level since December 2009.

Analysts said the main factor weighing on the euro Friday was a report posted on the website of a German newspaper, Der Spiegel, that said the Greek government was considering leaving the euro currency bloc.

Finance ministers from several European countries met Friday amid concerns over Greece and Portugal, as Greek and other European Union officials vehemently denied that Athens was considering leaving the eurozone.

Greek Finance Minister George Papaconstantinou attended the informal meeting in Luxembourg.

“It is absolutely evident that in these talks there was no discussion nor was any issue raised concerning Greece’s participation in the eurozone, as various foreign media outlets said irresponsibly and for their own reasons,” the Greek Ministry said in a statement.

Steffen Seibert, spokesman for German Chancellor Angela Merkel, said that “there is a meeting of some finance ministers that has long been planned. Greece exiting the eurozone is not on the agenda of that meeting, and it has never been.”

Greece was bailed out last year and its economy has struggled amid steep cuts in government spending and other reforms put in place as part of the emergency aid package from its European neighbors and the International Monetary Fund.

Despite dismissals from officials, the story “does seem to be having a market effect,” said Ron Leven, currency strategist for Morgan Stanley in New York. But he played down the significance of the report. “For (Greece) to leave the euro is very complicated. It’s not like they can just wake up tomorrow and say we’re not in the euro anymore.”

Greece’s departure from the euro would also harm the European banking sector, said Bob Sinche, the head of foreign exchange strategy at the Royal Bank of Scotland.

“The risks to the eurozone banking system and economy are so great that eurozone leaders would resist this pretty significantly,” Sinche said.

Greece could default on its debts if it withdrew from the euro, harming the European banks that own its bonds. Sinche added that Greece’s departure would increase risks for Portugal and Ireland, the euro bloc’s weakest countries.

In other trading Friday, the dollar rose to 80.58 Japanese yen from 80.19 yen, while the British pound traded at $1.6370 from $1.6379, coming off its earlier highs above $1.64. The dollar gained to 0.8787 Swiss franc from 0.8704 Swiss franc and was worth 96.92 Canadian cents from 96.90 Canadian cents.

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Against the Euro and the Swiss Franc, Cable is rising for the first time in more than a week. GBP/CHF is holding above 1.7200 but the pair retreated from intra-day high at 1.7305. EUR/GBP is back below 0.8800. The pair fell and found support at 0.8775.

James Chen, Chief analyst at FX Solutions, comments: “After traversing up a dramatically steep parallel uptrend channel for the past week and a half, price action on EUR/GBP, a 4-hour chart of which is shown, has finally shown signs of a potential bullish exhaustion by making a tentative breakdown below the channel. This occurs after price hit a 12-week high of 0.8837 on Thursday. With continued bearishness on this breakdown, a clear initial support target to the downside resides around the 0.8700 price region.”

Fixed Exchange Rates
There are two ways the price of a currency can be determined against another. A fixed, or pegged, rate is a rate the government (central bank) sets and maintains as the official exchange rate. A set price will be determined against a major world currency (usually the U.S. dollar, but also other major currencies such as the euro, the yen or a basket of currencies). In order to maintain the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market in return for the currency to which it is pegged. (To learn more, read What Are Central Banks? and Get To Know The Major Central Banks.)

If, for example, it is determined that the value of a single unit of local currency is equal to US$3, the central bank will have to ensure that it can supply the market with those dollars. In order to maintain the rate, the central bank must keep a high level of foreign reserves. This is a reserved amount of foreign currency held by the central bank that it can use to release (or absorb) extra funds into (or out of) the market. This ensures an appropriate money supply, appropriate fluctuations in the market (inflation/deflation), and ultimately, the exchange rate. The central bank can also adjust the official exchange rate when necessary.

Floating Exchange Rates
Unlike the fixed rate, a floating exchange rate is determined by the private market through supply and demand. A floating rate is often termed “self-correcting”, as any differences in supply and demand will automatically be corrected in the market. Take a look at this simplified model: if demand for a currency is low, its value will decrease, thus making imported goods more expensive and stimulating demand for local goods and services. This in turn will generate more jobs, causing an auto-correction in the market. A floating exchange rate is constantly changing.

In reality, no currency is wholly fixed or floating. In a fixed regime, market pressures can also influence changes in the exchange rate. Sometimes, when a local currency does reflect its true value against its pegged currency, a “black market”, which is more reflective of actual supply and demand, may develop. A central bank will often then be forced to revalue or devalue the official rate so that the rate is in line with the unofficial one, thereby halting the activity of the black market.

In a floating regime, the central bank may also intervene when it is necessary to ensure stability and to avoid inflation; however, it is less often that the central bank of a floating regime will interfere.