The euro extended its losses in Asian trade Friday after a weak set of inflation data raised fears the debt-wracked eurozone could sink into a deflationary spiral.

The single currency bought $1.3547 and 133.04 yen in Tokyo, against $1.3579 and 133.60 yen in New York and sharply lower than the $1.3708 and 134.85 yen late in Asia Thursday. The dollar slipped to 98.16 yen Friday from 98.37 yen.

Traders dumped the euro on Thursday after the European Union statistics agency Eurostat showed inflation across the 17-country eurozone fell sharply in October to 0.7 percent, the lowest level in nearly four years.

The figure was well below the European Central Bank's target of two percent and raises concerns the region could be in for a period of deflation, putting pressure on policymakers to lower interest rates even further.

"Data has been in the driving seat overnight, in particular the unexpectedly sharp drop in eurozone inflation data," National Australia Bank (NAB) said in a note.

The weak data spawned speculation that the ECB would soon lower interest rates to prop up the economy, a senior dealer at a Japanese bank told Dow Jones Newswires. Lower interest rates generally hit a region's currencies as investors seek out other assets for better returns.