* But after hitting a new 20-year high of 104.07 earlier in the session, the dollar index lost momentum and was down 0.3% at 103.29.
* The drop was explained in part by gains in the euro, which added as much as 0.6% on the day. Later in the day, the euro appreciated 0.5% to $1.0587.
* The single currency was buoyed by comments made by French central bank chief Francois Villeroy de Galhau, who said the ECB should raise its bank deposit rate again to bring it into positive territory this year.
* The ECB has moved too slowly to remove its monetary stimulus this year, but record inflation has prompted more of the bank’s governing council to act faster.
* ECB board member Joachim Nagel, who heads Germany’s Bundesbank, also signaled his support for taking action sooner rather than later in separate comments on Friday, saying the central bank’s window to raise rates was slowly closing.
* “It looks like the ECB is laying the groundwork now to dictate a deposit rate hike in July, which is looking more and more like the baseline scenario,” said Lee Hardman, director of FX analyst at MUFG.
* Meanwhile, the British pound was trading virtually flat after falling below $1.23 for the first time in almost two years, a day after the Bank of England sent a stark warning that Britain is at risk of suffer a recession and inflation above 10%.
* The Japanese currency fell slightly against the dollar, down 0.1% to 130.35 yen.
* As for cryptocurrencies, bitcoin weakened 2% to trade just below $36,000.
By Iain Withers
Source: Ambito
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