NEW YORK, Nov. 6 (Reuters) — The dollar shot to 18-month highs against the euro on Friday, after the euro zone currency failed to breach $1.20 in the wake of a soft US payrolls report, unleashing a torrent of selling.
Hedge funds in particular bailed out of their positions as the euro dropped through its previous low for the year at around $1.1870, traders said, sending the dollar surging across the board.
The dollar also pushed to another 26-month high against the Japanese yen, piercing through options-related defense at 118 yen up to 118.35 yen, according to Reuters data.
This week the dollar had its best performance against the yen since the beginning of July.
Against the Swiss franc, the dollar rose 1.1 percent to 1.3062 francs, while sterling fell 1.1 percent to $1.7501.
"This dollar rally has legs until the Fed is done (raising US interest rates) and until the ECB is on a firm track of raising rates," said Joe Quinlan, chief market strategist, with Bank of America Capital Management.
By late afternoon, the euro settled at $1.1823, down 1 percent from late Thursday, after hitting its lowest level since 2004 at $1.1803, according to Reuters data.
The euro has been battered this week, putting up its worst performance against the dollar in more than two months.
Earlier in the session the euro firmed after a report showed the US economy created 56,000 jobs last month, below the median forecast for an increase of 100,000.
