The dollar weakened against a basket of major currencies on Friday ahead of a speech by Federal Reserve chief Janet Yellen that could affirm expectations for an interest rate hike on March 15. The dollar is up about 0.74 percent this week, its fourth straight weekly gain, boosted by hawkish comments from a slew of Fed speakers that have led to a dramatic revising of rate hike expectations. Speeches from Yellen and Fed Vice Chair Stanley Fischer on Friday are now widely expected to be the final clues to the timing of the next rate hike.
Futures traders now are pricing in an 80 percent chance of a Fed hike in March, up from 35 percent on Tuesday, according to the CME Group's FedWatch Tool.
"The markets are looking for validation for the increase in Fed rate hike expectations from comments from Fed Chair Yellen. That's the key issue for the market right now," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
The dollar was down 0.32 percent at 101.87 against a basket of six major currencies. On Thursday, the index hit a seven-week high of 102.26.
Against the Japanese yen the greenback was little changed.
The euro rose 0.48 percent against the dollar after a poll showed French far-right candidate Marine Le Pen's chances in the country's presidential election dimming.
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