TOKYO -- The euro fell to its lowest level in a year against the dollar while the yen shot up in Asian trade Friday as the market digested a downgrade in the eurozone's growth forecasts, dealers said.

The European Central Bank on Thursday cut its growth forecast for the year to 1.4 percent from 1.8 percent. The 15-member eurozone in the second quarter suffered its first contraction since the bloc's creation in 1999.

The revision also had effects on the yen, as panicked dealers sold off the dollar for the Japanese currency, which is low-yielding and often used to stock up for investment later elsewhere.

"There was a storm of the euro-selling to buy the dollar and dollar-selling to buy back the yen, but the activity is calming down now," said Marito Ueda, a currency dealer at FX Prime Corp.

The euro slipped to $1.4280 in Tokyo trade, its lowest level since October 2007, down from $1.4321 in New York late Thursday. The European single currency also fell to 153.24 yen from 153.42.

The dollar dipped to a low of 105.67 yen in early trade in Sydney before rising to 107.33 in Tokyo trade, virtually unchanged from its New York close.

But Yuzo Sakai, currency trading manager at Tokyo Forex and Ueda Harlow, predicted that the yen could rise again.

"Many players appear to be keen to sell high-yield currencies such as the euro against the yen amid growing speculation that a global economic slowdown may prompt central banks in many countries to cut rates," Sakai told Dow Jones Newswires.

The European Central Bank and the Bank of England on Thursday both kept their key lending rates unchanged at 4.25 percent and 5.00 percent, respectively.

The decisions were widely expected, but the market moved on the downward revision on growth announced by ECB president Jean-Claude Trichet. He also estimated the eurozone would grow next year at 1.2 percent, compared with an earlier outlook of 1.5 percent.

He gave no indication the bank was ready to lower interest rates to help stimulate the fragile-looking eurozone economy, with concerns also lingering about inflation.