The U.S. dollar was on track for its biggest weekly percentage fall against the yen since the 2008 financial crisis in the aftermath of the Bank of Japan’s decision not to ease policy further, while strong euro zone growth data boosted the euro.
The dollar was last down 1.3 percent against the yen at 106.72 yen on Friday, near an 18-month low. The dollar was last down about 4.5 percent against the yen for the week, putting it on track for its biggest weekly loss since October 2008.
The dollar also tumbled against the euro, with the euro hitting its highest against the dollar in two and a half weeks. The euro was last up 0.8 percent against the dollar at $1.1448.
The dollar index, which measures the greenback against a basket of six other major currencies, hit an eight-month low and was last down 0.7 percent at 93.12.
Analysts said the yen continued to surge in the aftermath of the BOJ’s decision to hold monetary policy steady on Thursday in the face of soft global demand and a sharp rise in the yen, defying expectations for increased stimulus to fight deflation.
“It’s just a continuation of momentum after the BOJ policy announcement,” said Vassili Serebriakov, currency strategist at BNP Paribas in New York. He said the dollar could weaken to 105 yen before June, when he said the BOJ would likely step in with increased stimulus.
Analysts said preliminary data on Friday showing growth in the euro zone economy accelerated more than expected in the first quarter boosted the euro, while data showing U.S. inflation barely rose in March as consumer spending remained tepid weakened the dollar on the margin.
The European Union’s statistics office Eurostat said gross domestic product in the 19 countries sharing the euro rose 0.6 percent quarter-on-quarter in the January-March period, while the U.S. Commerce Department said the personal consumption expenditures price index edged up 0.1 percent last month after an upwardly revised 0.2 percent increase in February.
Mom and pop investors were also likely rebalancing portfolios ahead of month-end and selling the dollar in the wake of the Federal Reserve’s policy statement from Wednesday, said Greg Anderson, global head of FX strategy at BMO Capital Markets in New York.
The Fed’s statement was viewed as largely dovish, with the U.S. central bank being in no rush to hike interest rates again.