The U.S. dollar paused for breath on Friday as its recent rapid ascent on the yen attracted profit taking, though the market mood remains bullish on the currency given the outperformance of the U.S. economy.
The dollar had set up camp at 118.21 yen to be within easy walking distance of the seven-year peak of 118.96, while the euro leveled off at 148.17 from a top around 149.12.
Having climbed almost 10 yen since the Bank of Japan sprang its surprise easing in late October, the dollar was overdue some consolidation if not a correction.
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Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.