The dollar tumbled to a three-year low versus a basket of currencies on Friday, on track for its largest weekly loss in two years, as bearish factors counterbalanced support the U.S. currency could take from rising Treasury yields.
U.S. debt yields stood near multi-year highs. Two-year note yields reached a 9 ½-year high as bond prices dropped on Federal Reserve officials' signaling that recent volatility in U.S. stocks would not stop them hiking interest rates in March.
The dollar index, which tracks the greenback against a basket of six major rivals, dropped to as low as 88.37, and was poised to lose more than two percent for the week, its largest such loss in two years.
There is no strong consensus yet on what is driving the dollar's persistent weakness, especially in light of rising yields. Some say it simply reflects a return of risk appetite and a shift to higher-yielding currencies, including many emerging market ones.
However, others cite concerns that Washington might pursue a weak dollar strategy as well as talk that foreign central banks may be reallocating their reserves out of the dollar.
There are also worries President Donald Trump's tax reduction and fiscal spending could fuel inflation and erode the value of the dollar.
The euro climbed to $1.2545, its highest since December 2014.
The dollar stood at 106.15 yen, having fallen to as low as 106.015, its weakest level since November 2016.
The Japanese currency showed little reaction to the reappointment of Haruhiko Kuroda as Bank of Japan governor and the nomination of BOJ executive director Masayoshi Amamiya and Waseda University professor Masazumi Wakatabe as deputy governors.