The greenback rebounded against the euro after this week’s selloff on the aggressive rates cut by Fed. Investors took profit on Friday as a drop in U.S. stocks prompted investors to buy safe-haven Treasury bond. Euro retreated from 1.4777 to 1.4660 versus the dollar on Friday.

Investors scaled back bets for another aggressive Federal Reserve interest rate cut next week and on optimism a $150 billion stimulus package would help support the U.S. economy. Interest-rate futures showed a 66% chance the Fed will cut its target rate by a half-percentage point on Jan. 30, compared with 76% odds on Thursday. The odds of a cut of a quarter-percentage point are now 34%. Two- and 10-year Treasury notes rallied today as investors sought the relative safety of U.S. government debt. The two-year note's yield fell 0.12% to 2.19%, while the 10-year yield dropped 0.14% to 3.56 %.

U.S. stocks extended losses in the afternoon as safe-haven Treasury bond prices rose, reflecting considerable uncertainty about the near-term outlook. The Standard & Poor's 500 Index dropped 1.6% and the Dow Jones Industrial Average depreciated by 1.4%.

The greenback rose initially against the Japanese unit to 107.90 on dovish comments from BOJ's Fukui who said the central bank will keep current accommodative monetary condition to help the economy achieve stable growth. The pair then fell to 106.72 on active cross unwinding in jpy in late U.S. session due to the selloff in U.S. stocks.

U.S. currency rebounded against the Swiss franc from 1.0864 to 1.0990 although Swiss central bank President Jean-Pierre Roth said the recent gains in the currencies are ‘welcome’ and an expected result of turmoil in global financial markets. The British pound rose from 1.9738 to 1.9850.

Next week will see the release of Japan’s CSPI, U.S. new home sales and Midwest manufacturing on Monday; Japan’s retail sales, eurozone current account, U.K. CBI distribution trade, U.S. durable goods and consumer confidence on Tuesday; Japan’s industrial production, U.S. ADP employment, personal consumption, GDP and the closely watched FOMC rates decision on Wednesday; Japan’s manufacturing PMI, German retail sales, U.K. Nationwide house price, eurozone HICP, business climate and unemployment rate, U.K. Gfk survey, U.S. jobless claims, personal spending, core PCE and Chicago PMI on Thursday; German, eurozone and U.K. PMI manufacturing, U.S. non-farm payrolls, University of Michigan survey, ISM manufacturing and construction spending on Friday.