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The dollar hovered near a 10-week high against the yen on Friday, thanks to a surge in Treasury yields after United States (US) gross domestic product data topped expectations.
The greenback was a touch higher at 111.445 yen and within striking distance of 111.495, its strongest level since December 20 brushed overnight.
The dollar index against a basket of six major currencies stood at 96.222 after grinding out a 0.15 per cent gain on Thursday, when it pulled back from a three-week trough of 95.824.
The overnight wobbles in the US currency came as the euro rallied on growing expectations that the European economy may have turned a corner.
But the dollar managed to claw back its losses after data showed US gross domestic product (GDP) increased at a 2.6 per cent annualised rate in the fourth quarter, above economists' forecasts for a 2.3 per cent gain.
“The dollar received a clean break as Treasury yields rose in earnest following the robust US GDP data. The strong response to the US GDP data shows that the market is currently focused on fundamentals, rather than geopolitical factors,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
The dollar suffered brief dips against the yen, a perceived safe-haven, this week as tensions between India and Pakistan flared and as a summit between US President Donald Trump and North Korean leader Kim Jong-un ended without an agreement.
But the US currency was on track for a 0.70 per cent weekly gain against its Japanese peer.
The euro was steady at $1.1369, having slid from a three-week peak of $1.1420 scaled the previous day.
The Australian dollar nudged up 0.1 per cent to $0.7099, trimming some of the previous day's sharp losses.
The Aussie took a hit on Thursday after a disappointing reading on Chinese manufacturing overshadowed a solid report on domestic business investment.
The benchmark 10-year US Treasury yield stood at 2.720 per cent after surging to 2.731 per cent on Thursday, its highest since February 6.
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