Dollar scores eighth straight month of gains

The dollar edged higher against the euro Friday, building on the prior day's sharp rally and closing February with its eighth consecutive month of gains.

The greenback found support from the latest government estimate of economic growth in the fourth quarter. Though revised lower, to 2.2 percent from 2.6 percent, the pace was better than expected.

"There was more good news than bad in the second estimate of fourth-quarter US GDP," said Moody's Analytics. "The composition was better and sets up well for the first three months of this year."

The euro had support as inflation data improved slightly in key eurozone economies, said Eric Viloria, currency strategist at Wells Fargo Securities, easing deflation fears somewhat.

Inflation in Germany rose 0.1 percent after dropping 0.4 percent in January.

In addition, German lawmakers approved a four-month bailout extension for Greece, clearing a key hurdle to keeping the new government in Athens financed and avoid a default.

The market was looking ahead to Thursday's European Central Bank monetary policy. ECB President Mario Draghi is expected to provide details about the unprecedented large-scale asset-purchase program, or quantitative easing, announced last month.

"Some of the details that we expect Mario Draghi to provide include the exact date of when asset purchases will begin, how long they will last, the breadth of bonds purchased and whether national central banks can buy other country's bonds or only their own," said Kathy Lien of BK Asset Management.

"One of the main reasons why investors sold euros aggressively in the month of January was because of the fear that Greece could leave the eurozone. This week that fear and concern was eliminated (for the time being)," she said in a research note.

"It may be time to consider buying euros. The single currency fell to a one-month low versus the US dollar this past week despite stronger eurozone and weaker US data."