Philadelphia Fed President Charles Plosser said during a speech Friday that the central bank needed to change policies and raise interest rates in "the not-too-distant future."

Central banks raise interest rates to help counter inflation, and higher rates on government bonds tend to increase demand for the currency linked to that country or region.

Plosser is known for his hawkish comments, but with light trading on Friday and not much other news, the dollar is moving higher on the speech, said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.

The euro, used by 17 European countries, has been climbing this year on expectations that the European Central Bank will lift interest rates as soon as April, ahead of any plans by the Federal Reserve to do the same.

But the European debt crisis is weighing more heavily on the euro this week. Portugal is facing political uncertainty and expectations are growing that it will seek a heavy bailout like Greece and Ireland did last year. Such a move would be the latest sign for investors that Europe's debt problems might not be easily resolved.

Portugal's minority government fell Wednesday after its Parliament voted down austerity measures that would have helped it cut government debt.

The euro fell to $1.4073 during late trading Friday, from $1.4183 late Thursday. The British pound fell to $1.6019 from $1.6111.

The U.S. dollar rose to 81.41 Japanese yen from 80.95 yen late Thursday. Japan's nuclear situation remains a concern as a suspected breach in the reactor at the stricken Fukushima plant raised fears of more serious radioactive contamination.