The euro dropped almost half a percent on Friday after signs that financial development could be slowing across the euro zone.

Euro zone business development slowed much quicker than anticipated for the current month, a widely-watched Purchasing Managers Index (PMI) survey showed.

The disappointing readings were hurried by a progressing U.S.-led trade war and will probably be of worry to the European Central Bank which is expected to draw a line under its 2.6 billion euro asset purchase program next month.

German private-sector development slowed to its lowest level in almost four years as factories in Europe's biggest economy churned out goods at a slower pace.

The single currency, earlier trading positive, dropped more than 0.4 percent to as low as $1.1402 after the surveys were distributed.

The euro also dropped 0.2 percent against the Swiss franc to 1.1326 francs.

"Particularly the German PMI was disappointing ... The environment for the euro is getting more difficult," said Thu Lan Nguyen, a Frankfurt-based strategist at Commerzbank, pointing to a dispute over Italy’s spending plans and concerns about the bloc's growth outlook.

"The economy in the euro zone has cooled significantly over the past months and unless this is just a brief interlude the European Central Bank might be forced to stick to an expansionary monetary policy," she said.