The greenback rallied against currencies of commodity-producing nations on risk aversion after oil and base metal prices tumbled on fears of a decline in global demand if the United States slips into recession or the global economy is slowing.

Commodities' tumble and the dollar's rebound gained momentum after the Federal Reserve on March 18 cut interest rates by 75 basis points to 2.25%. Commodities had their biggest weekly drop in more than 50 years. Traders exited a range of profitable bets and hedge funds were enforced to liquidate positions on higher margin calls.

Estimates from Credit Suisse suggested the euro is overvalued by about 33% against the dollar on the basis of purchasing power parity, which measures the relative value of two currencies using a basket of goods. The single currency tumbled against the dollar and Japanese yen from 1.5650 to 1.5396 and from 155.17 to 151.70 respectively.

On the data front, the Fed Bank of Philadelphia said its general economic index was minus 17.4 this month (slightly better than the expectation of minus 18.3), from minus 24 in February, as the region's manufacturing contracted a fourth straight month.

The British pound fell to 1.9735 and then rebounded to 1.9855 after the release of higher-than-expected U.K. retail sales data. The greenback rallied against the Swiss franc from 0.9957 to 1.0168 on Thursday. U.S. currency traded inside 98.45-100.21 broad range versus the Japanese yen due to active cross trading in jpy.

There are rumors circulating in FX markets that central banks may take action to intervene on Good Friday due to thin market condition as European n U.S. markets are closed on Easter holiday. There were rumors earlier that some U.K. traders were requested to report duty tomorrow. U.S. currency is likely to gain more ground next week as investors may further unwind positions in commodities.

Most of the major financial markets are closed on Friday except Japan. Financial markets in the Australia, Hong Kong, euro zone and London are closed on Monday whilst U.S. will resume trading.