The US dollar recovered slightly on Friday but remained set for its biggest quarterly decline against a basket of rival currencies in nearly seven years after hawkish signals from foreign central banks this week pressured the greenback further.
Investors have ramped-up expectations for tighter monetary policy from the European Central Bank, Bank of England and Bank of Canada after hints from officials this week. This has made the greenback less attractive, in addition to doubts that the Federal Reserve would be able to raise interest rates again this year and that US President Donald Trump could enact his pro-growth agenda.
The US dollar index, which measures the greenback against a basket of six major currencies, was set to decline about 4.6 percent for the second quarter to mark its steepest quarterly percentage drop since the third quarter of 2010.
The euro was set to gain more than 7 percent against the greenback for its biggest quarterly percentage gain since the third quarter of 2010. The euro has racked up about 2 percent of its gains and the dollar index has posted 1.6 percent of its losses this week alone.
"What really gave the hawkish central banks extra punch was how it seemed to be a coordinated effort to signal a shift away from low-rate policies," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
He said improving economic growth in Europe and Canada opened the door for those comments and was "a reality check how the US isn't standing head and shoulders above everyone else."
The dollar index was last up 0.1 percent at 95.727, while the euro was down 0.2 percent against the dollar at $1.1412. The euro touched its strongest in nearly 14 months on Thursday of $1.1445, while the dollar index touched a roughly nine-month low of 95.470 early Friday.
Analysts said Friday's bounce for the dollar came as some traders likely took profits on gains in the euro as well as the sterling. The dollar fell against the Canadian dollar, however, and was last at C$1.2985 after touching a nearly 10-month low of C$1.2948 earlier.