NEW YORK Mon Oct 6, 2014 10:39am EDT
NEW YORK(Reuters) - The dollar's rally took a breather on Monday on profit-taking that emerged after Friday's solid U.S. jobs report reinforced the view the Federal Reserve would raise interest rates in mid-2015.
The greenback's 12 straight weeks of gains since early July are the longest in over 40 years. Analysts reckoned the dollar's winning streak would resume as the U.S. economy will likely grow faster than Europe and Japan in the foreseeable future as China shows signs of slowing.
"We are having a bit of profit-taking. We've had a huge (rally) with the dollar, especially against the euro," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff, New Jersey.
The dollar index, which tracks the greenback against six major currencies, was last down 0.4 percent on the day at 86.343 .DXY after rising to a four-year high of 86.746 on Friday. It is heading for its best annual gain in nine years, adding about 8 percent so far in 2014.
Against the yen, the greenback was down 0.44 percent on the day at 109.285 yen on the EBS trading platform. The dollar had hit a six-year peak of 110.09 yen last Thursday.
The euro gained 0.3 percent at $1.25590, holding above a two-year low of $1.25005 hit on Friday.
The single currency hit a near two-month high against the Swiss franc, and last traded up nearly 0.2 percent at 1.2124 francs EURCHF=EBS
The euro rose as traders brushed off a disappointing report on German industrial orders, which fell 5.7 percent in August for its biggest monthly drop since 2009.
While investors are increasingly convinced the Fed will raise rates next year, most believe the European Central Bank will loosen policy further as part of efforts to rescue a moribund euro zone economy, arguing for a weaker euro.
"It does look like a perfect storm for the euro against the dollar at the moment," said Peter Kinsella, a Commerzbank strategist in London. "The dollar is the only show in town."
Speculators increased their bullish bets on the dollar in the latest week to their largest since June 2013, with the value of the dollar's net long position rising to $37.36 billion in the week ended Sept. 30, from $35.81 billion the previous week.
This was the seventh straight week net longs in the dollar have totaled at least $30 billion, according to data from the Commodity Futures Trading Commission.
Among other major currencies, the Australian dollar climbed 0.55 percent to $0.8723 compared to a more than 4-year low of $0.8642 hit on Friday. Investors will be watching a Reserve Bank of Australia review on Tuesday for efforts to talk its currency even lower.
(Additional reporting by Patrick Grahamin London; Lisa Twaronite in Tokyo; Editing by John Stonestreet and Meredith Mazzilli)