The dollar rose against the euro on Friday and could extend its rebound next week, buoyed by higher Treasury yields after a sharp drop in the U.S. jobless rate brightened the outlook for the U.S. economy.

The euro fell as low as $1.3543 on trading platform EBS on Friday, retreating further from a nearly three-month high at $1.3862 set earlier this week. Traders said the break through support at $1.3570 suggests a three-week euro rally may be showing signs of exhaustion.

"Overall, we think the euro's move was overdone and the retracement we've seen in the second part of this week should probably continue into early next week," said John Doyle, strategist at Tempus Consulting in Washington.