The dollar took a dive on Friday, but it could catch a bid next week

The U.S. dollar index was extremely volatile in Friday trading, tumbling midmorning after President Donald Trump's former national security advisor Michael Flynn pleaded guilty to lying to the FBI about his communication with Russia's ambassador to the United States.

Despite the greenback's choppy trading to close the week, it could catch a bid next week ahead of the U.S. employment report, said Kathy Lien, managing director at BK Asset Management. Here are her reasons the dollar sold off on Friday, and what we can expect in the week ahead.

• The significant volatility seen in the dollar on Friday was a result of reports related to the proposed tax bill, Flynn-related reports and the continued threat of North Korea's nuclear program.

• Sen. Mitch McConnell's statement to reporters that enough votes were cast to pass the Senate tax bill should have been overwhelmingly positive for the dollar's relative strength, Lien said, and the dollar pared some of its losses at that time.

U.S. dollar intraday chart

• Still, media reports around Flynn overshadowed the tax bill report that should have been more bullish, she said.

• While the start of next week could usher in continued pressure for the U.S. dollar on uncertainty across various fronts, Lien said, the dollar could see upside into the middle and end of the week as investors pin hopes on a strong monthly employment report. The dollar rose modestly when last month's employment report was published.

Bottom line: The dollar was volatile in Friday trading but could catch a bid next week ahead of the employment report.

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