Dollar loses steam after weeks-long rally

The U.S. dollar was headed for its worst week since early February versus major peers on Friday, as some of the heat faded from the currency’s breakneck 10% surge.

The greenback has been supported by a flight to safety by investors, amid a rout across markets due to fears of the impact of soaring inflation and Russia’s invasion of Ukraine.

But after rising in all but two of the last 14 weeks, the dollar index was on track for a 1.5% weekly fall on Friday.

The index, which tracks the dollar against six major rivals, was broadly flat on the day at 102.92. Last Friday, it had soared to the highest since January 2003 at 105.01.

“We are not convinced that the fundamentals argue in favour of a more sustained pullback for the US dollar at the current juncture although cracks may be appearing,” currency analysts at MUFG said in a note.

A recent build-up of long U.S. dollar positions could help extend the pullback, the note added.

Other safe-haven currencies have rallied this week as global stocks have come under pressure.

The Swiss franc was on track for a nearly 3% weekly gain versus the dollar, while the Japanese yen was set for an almost 1% weekly gain.

The Swiss franc was last broadly flat at 0.97350 franc, while the yen was down 0.2% at 128.205 yen.

The euro has also benefitted from the dollar’s weakness, and was on track for a weekly gain of 1.5%. It was last down 0.1% on the day at $1.05755.

Sterling was set for its biggest weekly gain since December 2020, and was flat on the day at $1.24805.

In cryptocurrencies, Bitcoin was flat at just above $30,000, arresting steep declines seen in recent weeks.