The euro traded steadily above $1.35 on Friday morning as investors kept a close eye on Washington for any movement on a debt deal.
On Thursday, President Barack Obama and Republican lawmakers met at the White House to discuss the matter in person for the first time since the shutdown began. Although no deal was reached, the talks continued into the night.
Uncertainty about the US budget showdown has weighed on the dollar recently. With the US Federal government on hold for almost two weeks, investors have worried that the nation will not come to an agreement before the October-17 deadline and will default on its loans.
However, the deadlock seems close to thawing as both Obama and Republican leaders have been considering the possibility of a short term increase to the borrowing limit to prevent defaulting.
More strong data from the euro zone supported the common currency and added to evidence of the region's growing recovery. The Wall Street Journal reported that house prices in the euro zone were 0.3 percent higher in the second quarter than in the first. The rise marks the first quarterly gain since the second quarter of 2012, but prices are still lower than they were one year ago.
With economic growth picking up in the region and mortgage rates still at a low, the housing market is starting to turn around. Even in countries like Spain, where the recovery has been slow to take hold, housing prices fell at a slower rate from quarter to quarter and improved marginally from June to July.
By Laura Brodbeck