FOREX-Dollar set for worst week in a month, euro rides high

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Iain Withers
LONDON, Dec 4 (Reuters) - The dollar was headed for its
worst week in a month on Friday after plumbing a 2-1/2 year low,
as investors bet the greenback has further to fall and that the
worst of the COVID-19 pandemic could be over within months.
A flurry of positive vaccine news has helped drive a rally
in riskier currencies, while actions taken by the Federal
Reserve have weakened the dollar.
The dollar index hit a low of 90.504 on Thursday and is on
track for a more than 1% fall over the week. It was last broadly
flat on the day at 90.628. =USD
"It has been another bad week for the US dollar," analysts
at MUFG said in a note. "It will encourage speculators to
rebuild short US dollar positions which have been pared in
recent months."
Investors have turned heavily short dollars, figuring rates
will stay low for a long time in the United States forcing
yield-seekers to head elsewhere for better returns.
Investors will get a further indicator of how the U.S.
economy is holding up at 1330 GMT, with monthly payrolls data
expected to show employment growth, but at a slower pace.
The euro has been one of the biggest winners from recent
dollar weakness, breaking decisively above $1.20 this week and
is on track for a more than 2% weekly gain. EUR=EBS
The single currency was up 0.2% on the day, at $1.2168.
"The euro is holding above the $1.21 level for the first
time since spring 2018, despite the fact that there is only a
week to go before the European Central Bank is expected to add
more policy stimulus," said Rabobank strategist Jane Foley.
The yen JPY= was broadly steady against the dollar on
Friday, while sterling edged down against both the dollar and
euro with Brexit trade talks between the UK and European Union
at a critical stage. GBP=D3 EURGBP+D3