The U.S. dollar fell against the yen Friday from its highest level since March, ahead of Japan's general election over the weekend. The ICE dollar index , which measures the greenback against a basket of six rival currencies, fell to 79.543 in afternoon trade from 79.925 in late North America trade on Thursday. The dollar turned down to ¥83.51 from ¥83.65 the prior day. Read: Japan's election hinges on undecided voters The biggest event coming up for currency traders is Sunday's election in Japan, when Liberal Democratic Party leader Shinzo Abe is expected to return to power. The dollar rose over the last several days to its highest level since March versus the yen on expectations that Abe will follow through on calls for more aggressive monetary easing and higher inflation. “Taking into account the potentially large impact on the yen of higher inflation targeting under a new administration," Barclays now sees the dollar rising as high as ¥90 over the next year, which would be its highest level since 2010. The dollar is still up 1.3% this week versus its Japanese counterpart. Among other major currency pairs, the euro climbed to $1.3156 from $1.3077 in late trade on Thursday. It hasn't ended above $1.31 since Oct. 17, according to FactSet. Ashraf Laidi, chief global strategist at City Index, said the sharp move was driven by traders unwinding positions against the euro from months ago. Traders with “books nearing year-end are unwinding euro shorts versus gold, which were accumulated in early May [due to] Greek election uncertainty," he said. “The successful completion of Greek buybacks, Greece's receipt of its much needed €33 billion tranche and preliminary accords on [European Union] banking union have further weighed on tail risks." Greece was just one source of positive developments in the euro zone this week, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. “European officials also had a good week," he wrote in a note. “Aid to Greece was approved, averting a more serious crisis. The broad strokes of the European Central Bank taking on the responsibility of supervisor for important (nationally or systemically) banks have been agreed upon." “Yet there is still much to be concerned about" as more austerity in other countries could lead to political changes that can strain the relationship between countries needing aid and those being asked to give it, he added. This week, the euro gained 1.8%, with the shared currency reversing from a negative yearly performance to a 1.6% rise. The pound rebounded against the dollar to $1.6157 from $1.6112 Thursday, when Standard & Poor's Ratings Services cut its outlook on the U.K.'s triple-A credit rating to negative from stable. The Australian dollar rose to $1.0561 from $1.0527. Marketwatch
