The dollar steadied against the yen and euro on Friday after retreating from a recent rally that took the greenback to 7-month highs against a basket of peers.
The dollar was firm at 122.895 yen JPY= after sliding 0.6 percent on Thursday, snapping a four-day winning run. The Bank of Japan's decision not to ease monetary policy further weighed mildly on the U.S. currency, though it was still enroute to scape out a 0.2 percent gain this week.
"Foreign players appeared to have cleared out positions before the long Japanese weekend, pushing the dollar lower. Japanese investors, on the other hand, are buying on price dips and preventing a further decline," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
The Japanese financial markets will be closed on Monday for a public holiday. The euro was little changed at $1.0718 EUR= after gaining 0.7 percent overnight.
Traders saw the overnight decline in U.S. treasury yields more as a catalyst rather than a sole reason for the dollar's drop, noting the currency appeared ripe for profit taking after surging this week to a 7-month peak against a basket of currencies.
The dollar index stood at 99.070 .DXY, pulling back from a peak of 99.853 hit on Wednesday, its highest since mid-April.
The euro was still on track to lose 0.5 percent on the week after being buffeted by heightened prospects of the Federal Reserve hiking interest rates and the European Central Bank easing monetary policy next month.
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