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Dealers and analysts said the recovery looked
temporary after eight days which, peak to trough, have seen 5
percent knocked off the euro's value and taken the dollar past
many banks' targets for the next year.
Few doubt the dollar, backed by a growing gap between U.S. and
European market interest rates, will reach parity with the euro.
On Friday, it traded 0.4 percent lower at 1.0590 to the euro.
"I don't think its an exaggeration to say this week has been a
gamechanger," said Neil Mellor, a currency strategist with Bank
of New York Mellon in London.
"The combination of last Friday's jobs numbers and the launch of
QE in Europe this week has cemented the picture of monetary
policy divergence. People are now convinced the Federal Reserve
will be able to move in the middle of this year. In that
context, talk of parity and even below it is not overdone."
Mellor said in the key weeks of the dollar's appreciation over
the past six months it frequently turned lower on Friday, when
investors who made money during the week cash in.
The dollar index <.DXY> last stood little changed on the day at
99.392, after sliding 0.4 percent on Thursday, its biggest
one-day fall in a month. The index earlier rose as far as
100.060, a high not seen since mid-April 2003.
"The overnight session witnessed the long overdue consolidation
in USD," analysts at CitiFX wrote in a research note to clients.
"Our trading desk thinks it represents a generally healthy
corrective move. Indeed, we have seen good USD demand on dips.
Turnover is very high across the G10 space."
No major market-moving economic data due on Friday, leaving the
dollar index on track to end the week up more than 2 percent,
extending last week's 2.5 percent rally.
Against the yen, it slipped to 121.42 yen, pulling away from a
near eight-year high of 122.04.
(Additional reporting by Shinichi Saoshiro in TOKYO and Ian Chua
in SYDNEY; editing by Larry King)
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