The U.S. dollar strengthened against European major counterparts in European deals on Friday, amid heightening speculation for a Fed rate hike at September meeting, on the back of upbeat weekly jobless claims report released yesterday.

The Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits tumbled to their lowest level in over forty years in the week ended July 18th.

The report said initial jobless claims dropped to 255,000, from the previous week's unrevised level of 281,000. Economists had expected jobless claims to edge down to 279,000.

The Federal Reserve will meet next week, after hawish testimony from chair Janet Yellen intensified hopes that the bank would hike rates later this year. While it looks increasingly unlikely that the Fed would hike rates next week, investors remain apprehensive about the Fed taking a more hawkish turn.

Market participants will focus on durable goods orders, consumer confidence index, pending home sales and gross domestic data, due next week, for more indications about the growth of world's largest economy.

The currency has been trading firm against its major rivals, except the pound, in the previous session.

The greenback climbed to a 2-day high of 0.9624 versus the franc and a 10-day high of 1.5466 against the pound, from Thursday's closing values of 0.9584 and 1.5510, respectively. If the greenback extends rise, it may challenge resistance around 0.97 against the franc and 1.54 against the pound.

The greenback, which fell to 1.0995 versus the euro at 2:45 am ET, rose to 1.0930. The pair ended yesterday's trading at 1.0981. The greenback is seen finding resistance around the 1.08 mark.

The flash survey data from Markit Economics showed that Eurozone economic growth slowed slightly in July but the pace of expansion remained one of the strongest seen over the last four years.

The composite Purchasing Managers' Index fell to 53.7 in July from June's four-year high of 54.2. The expected score was 54.

The greenback remained higher against the yen, trading at 123.97. Next key resistance for the greenback is seen around the 125.00 region.

The U.S. new home sales for June and flash Markit manufacturing PMI for July are slated for release in the New York session.

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