The euro broke through its 1999 launch rate of $1.1747 on Friday, riding the latest wave of dollar disillusionment in a sudden burst of buying that took the market by surprise and brought it close to all-time highs.

The market had come up short of the launch rate several times this week, but it seemed only a matter of time before it went, as the dollar was unable to generate momentum amid market speculation the U.S. was comfortable with its weakening.

Though signs of discomfort have been growing in some quarters over the euro's 12 percent rise this year, the European Central Bank has voiced no protest, leaving the market comfortable about pushing it as far as it will go.

"This is just the underlying move that has been in place for months. Nothing is changing for the dollar," said Mitul Kotecha, head of global foreign exchange research at Credit Agricole Indosuez.

"While from time to time we will see some profit-taking...it will be temporary and short-lived."

By 1140 GMT, the single currency had risen nearly one percent versus the previous New York close to a peak of $1.1808. Its record high lies above $1.1880.

The euro hit its highest ever versus the yen at 138.10 and its highest in almost two years versus the Swiss franc of 1.5223.

Dealers saw nothing on the immediate horizon to stand in the euro's way.

The ECB could change that if it were to signal aggressive rate cuts ahead, but they might have to be rapid and big since the market is also focused on possible U.S. rate cuts, with the Federal Reserve recently mentioning deflation as a possible threat.

"The market seems to be getting into more of a froth about the fact there might be a need for another rate cut in the U.S.," said Henry Wilkes, head of trading desk at Brown Brothers Harriman.

"Although the ECB might cut, which would not improve the yield for the euro, if the U.S. cuts as well it's net-net no gain, no loss for the euro."

European Central Bank Governing Council member Nout Wellink, an anti-inflation hawk, cautiously admitted on Friday the bank had some room to lower interest rates and Spanish central bank governor Jaime Caruana said the euro zone inflation outlook had improved considerably.

The ECB's next rate meeting is set for June 5.

Regional consumer price data on Friday also suggested German inflation could dip below one percent in May, reducing the euro zone average and reinforcing expectations of a half-point interest rate cut by the European Central Bank.

Though the ECB has not stood in the way of the euro's uptrend, there have been complaints from other officials.

French Finance Minister Francis Mer said on Thursday the dollar was becoming too weak against the euro and urged the European Central Bank to cut interest rates to help stabilize the exchange rate.

"What it means is pressure on the ECB will rise," said Kotecha. "But will it be sufficient to turn the euro around? I doubt it."

The dollar saw little dramatic movement versus the yen, with the market wary of pushing the greenback lower after Japanese officials were detected on Monday acting to weaken the yen.

The dollar was steady at 117.02 yen, but off a two-week high of 117.78 yen hit on Thursday.