The dollar on Friday held on to most of the chunky gains it made the previous day, with key resistance levels in its grasp as tumbling commodity prices and a series of soft US data prompted profit-taking in higher-yielding currencies. While commodity prices stabilised somewhat on Friday, they could fall further after upcoming US jobs data, driving more gains in the dollar as the euro and commodity currencies are likely to fall in sympathy with other risk assets.
Market players also see limited chances of intervention from Japanese authorities, let alone joint action by the Group of Seven (G7) countries, after Japanese Finance Minister Yoshihiko Noda said on Thursday that current forex moves appear to be different from those seen around the time the G7 intervened in March.
The dollar index against a basket of currencies stood at 74.03, down slightly on the day after having risen 1.5 percent on Thursday, its biggest gain in over six months. It was well off a three-year trough of 72.696, with an immediate target seen at 74.653, the kijun line on the daily Ichimoku chart.
Many market players had been buying commodities on the view that money-printing by the US Federal Reserve should boost their value, which in turn was fuelling inflation world-wide, prompting some central banks to raise rates. The currency stabilised around $1.4545 after shedding more than 2 percent to as low as $1.4510 on Thursday, its lowest in over a week.
For now the euro was supported above the kijun line on its daily Ichimoku chart at $1.4501. More support is seen at $1.4490, its low on 26 April and $1.4455, a 61.8 percent retracement of its rally since mid-April. Some traders think the euro's adjustment may have run its course, after having fallen about 1.7 percent so far this week, which would be its largest weekly loss in four months if the euro remains at the current level by the end of Friday.
The dollar rose 0.6 percent to 80.55 yen in early Friday trade, bouncing from its seven-week low of 79.57 yen and tackling resistance from the bottom of the Ichimoku cloud at 80.493. The Aussie fetched $1.0725, off a two-week low of $1.0537 hit on Thursday. Against the yen, it gained about 1.6 percent to 86.30 yen, bouncing back from Thursday's five-week low of 84.39 yen.
A Reuters poll showed on Friday that analysts expect the Australian dollar to hang on above parity against the US dollar over the next year helped by speculation that domestic rates, already among the highest in the developed world, may head even higher.