The dollar fell against the euro and the yen on Friday, interrupting a rally that had pushed it to an 11-month high against the yen, after a slew of unexpectedly weak US data reports. A rise in Treasury bond yields after recent strong data indicated investors had been betting that the Federal Reserve may be more aggressive and tighten monetary policy sooner than anticipated or at least push further stimulus off the table.
But a sharp dollar sell-off began after a report showed little sign that underlying US inflation pressures were building up. The euro rose 0.6 percent to $1.3164, with steady buying from long-term investors seen from $1.3050 after the common currency dropped to a one-month low on Thursday. Below $1.30, chart support lies at the February 16 trough around $1.2975.
The dollar was down 0.2 percent at 83.31 yen, though not far from an 11-month peak touched on Thursday as the yen continued to struggle in the wake of surprise monetary easing in Japan last month. The dollar has gained around 8 percent against the yen so far this year as the spread between the two-year US Treasury yield and its Japanese counterpart remained elevated at levels not seen since mid-2011, Reuters data showed.
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