The dollar handed back some minimal gains against the yen on Friday to end a week that has quashed any hint it could be ready to deliver the strength many banks had predicted for this year.
The U.S. currency has lost 2.5 percent against the yen since last Friday, weighed down by guidance from Federal Reserve officials that the U.S. central bank is nowhere near as close to raising base interest rates as markets had begun to believe.
That comes after two weeks of robust gains against the , and the clearest signal yet that European policymakers are on the verge of starting to print billions in extra euros, all of which had encouraged many to believe the dollar was ready to break out higher.
In morning trade in Europe, it was down 0.06 percent against the yen at 101.46 yen and about 0.04 percent up and near $1.39 against the .
The argument at the start of this year was that a recovering U.S. economy and the steady tightening of monetary conditions that would result, while Japan and Europe lag, would see the dollar gain.
Those backing that trade have been shaken out more than once already, however, leaving the market stuck in tight ranges since a burst of activity around an emerging sell-off in January.
The dollar index last stood at 79.42, down about 1.2 percent so far this week. If sustained, this will be its biggest weekly fall in nine months.
Underpinning this mix are a range of factors which leave many investors suspicious the global economy is not on a particularly firm footing.
Dealers and strategists point to risks ranging from signals that China and Japan will be very cautious at best with the provision of any further stimulus to their economies, to worries over supplies of Russian gas to Europe and falling consumer prices in several euro zone countries.
That has helped support the view that, now that the financial system is beginning to normalize, prices of growth-related assets like stocks have been inflated too high by the extra cash central banks have provided since 2008.
The , one of the commodity-linked currencies often seen as a proxy for optimism over the global economy, fell almost half a percent overnight as the Nasdaq U.S. tech stocks index saw its biggest daily loss since late 2011.