LONDON, April 30 — The US dollar was on course to narrowly avoid a fourth straight weekly decline against a basket of major peers today, as analysts said profit-taking on dollar short positions was helping lift the currency.

The dollar index was set to end the week flat, although still down 2.56 per cent for the month as a whole.

Higher 0.2 per cent on the day by midday in London, it had been on track for a four-week losing streak during Asian trading, which would have been the longest fall since a six-week slide to the end of last July.

The monthly loss will be the biggest since July’s 4 per cent slump.

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“Month-end profit-taking could ultimately lend a hand to the dollar today to conclude a very difficult April for the dollar,” said Alexandre Dolci, G10 FX strategist at BBVA.

“Overall we do not expect this trend to have much longer legs in May, as in our view April’s dollar correction could have instead gone too far, too quick, although we retain a bearish dollar bias for the long run.”

Dolci added that this was particularly true against the euro, as the euro zone has yet to start closing the gap with the US on its vaccine rollout, managing the pandemic, and subsequently the economic recovery.

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The Canadian dollar climbed to a more-than three-year high of CUS$1.2264 per greenback on Friday, on track for a 1.6 per cent weekly gain that would be its biggest since the start of November.

After the Fed’s policy meeting on Wednesday, Chair Jerome Powell acknowledged the US economy’s growth, but said there was not yet enough evidence of “substantial further progress” toward recovery to warrant a change to its ultra-loose monetary settings.

That economic growth accelerated in the first quarter, buoyed by government stimulus cheques, setting the course for what is expected this year to be the strongest performance in nearly four decades.

Signs that a strengthening economy, particularly in the labour market, might force the Fed into an earlier tapering of its asset-purchase programme had pushed the dollar index, or DXY, to a five-month high at the end of March.

The Fed’s dovishness was in marked contrast to the Bank of Canada, which has already begun to taper its asset purchases. Canada’s commodity-linked loonie got additional support from a surge in oil to a six-week peak along with higher lumber prices.

Rising commodity prices also supported the Australian dollar , which gained 0.2 per cent to US$0.77785, climbing back toward a six-week high of US$0.78180 touched Thursday.

“We think the out-performance of pro-cyclical currencies (those exposed to the global business cycle) should be a core theme for the rest of the year, despite concerns about higher US yields,” said Chris Turner, global head of markets at ING.

The euro traded 0.3 per cent lower at US$1.2089, near the two-month high of US$1.2150 set the previous session. The shared currency is up 0.2 per cent for the week and 3.3 per cent for the month.

The yen, a traditional haven, traded 0.05 per cent higher at 108.85 per dollar, near the two-week low of 109.22 from Thursday, setting it up for a loss of about 0.9 per cent for the week. — Reuters