The dollar rallied on Friday erasing weakness suffered after an initial surge following Federal Reserve Chair Janet Yellen's speech. Yellen gave no indication a US interest rate rise was imminent, even though she acknowledged the case for a hike has increased recently.
The greenback surged after Yellen's speech but soon fell as investors digested some of its dovish details. From there it clawed back its deficit and closed sharply higher against its major rivals. EUR/USD rose to 1.1341 a few minutes after the speech but slipped sharply lower to 1.1180.
At a gathering of central bankers from round the world in Jackson Hole, Wyoming, Yellen said improvements in the US labor market and expectations for moderate economic growth have bolstered the case for a rate rise, supporting what the rate futures market has been pricing in for some time.
Futures markets are still pricing a roughly 24 percent chance that rates will rise in September, and a 57 percent likelihood of a December move, according to the CME's FedWatch.
Friday's second GDP estimate for the second quarter in the US showed a slightly lower increase than previously thought.
The dollar index, which measures the currency against a basket of six major counterparts, was up 0.77 percent at 95.50, while USD/JPY rose above 102.
