Yen set for biggest weekly drop in over two months

"It's not surprising that dollar-yen has gone up under the conditions that we're facing. It's a low-yielding currency facing a terms-of-trade shock with higher oil prices," said Thierry Wizman, global FX & rates strategist at Macquarie Group in New York.

"So if there's going to be a currency that the specs are going to go after in those conditions, it's going to be the yen... And so that girds the whole thesis for why it's been dollar-yen...doing so well since the war began, since oil prices went up."

The dollar index =USD, which measures the greenback against a basket of currencies, fell 0.04% to 101.4 but was up nearly 0.7% for the week, on track for its biggest weekly gain in five weeks.

Against the Japanese yen JPY=, the dollar weakened 0.04% to 163.78 but was up nearly 0.9% on the week, which would mark its strongest week since May 15. On Thursday, the dollar hit 163.98, its strongest against the yen since November 1986.