The U.S. dollar was higher against its major rivals in European deals on Friday, amid diverging monetary policy of the Federal Reserve, with that of the central banks of Europe and Japan.

While the Fed indicated a tightening stance by mid 2015, the European Central Bank and the Bank of Japan are pursuing stimulus measures, which tend to weaken their currencies.

The Fed struck to pledge of raising rates by next year, making dollar denominated assets more attractive. This is in sharp contrast with the European Central Bank's stance, which is ready to expand asset program to support fragile recovery.

Switzerland's central bank imposed negative interest rates on Thursday and indicated readiness to act further, as it seeks to discourage buying of the franc as a safe haven.

The dollar got a boost on Thursday, as falling U.S. jobless claims and Fed's assurance that rates would be increased as planned gave faith in the economy.

In its policy statement released on Wednesday, the Fed indicated that it is prepared to hike interest rates as scheduled, while replacing its "considerable time" language with a new language that the bank "can be patient" about the timing of the first rate hike.

Markets cheered the Fed chairwoman Janet Yellen's comments, who sounded an upbeat assessment of the economy, while signaling that the rates would rise after the "next couple of meetings."

The greenback edged up to 0.9822 against the franc, compared to 0.9796 hit late New York Thursday. The next possible resistance for the greenback-franc pair may be found around the 1.00 mark.

The greenback spiked up to 1.2252 against the European currency, its highest since December 8. At yesterday's close, the pair was quoted at 1.2285. Continuation of the greenback's bullish trend may lead it to a resistance around the 1.22 mark.

The survey by the market research group GfK showed that German consumer confidence is set to improve to an eight-year high at the start of the year on strong gains in economic expectations and willingness-to-buy as the current economic weakness is expected to be temporary.

The forward-looking consumer confidence index climbed to 9 for January, the highest since December 2006, from 8.7 in December.

Continuing early gains, the greenback hit an 8-day high of 119.49 against the Japanese yen. Next likely resistance for the greenback-yen pair may be eyed near the 120.8 region. The greenback-yen pair was valued at 118.81 when it ended yesterday's deals.

The Bank of Japan decided to leave its monetary stimulus unchanged in order to assess the impact of its past massive easing. The unchanged stance came despite falling oil prices posing a threat to the central bank's 2 percent inflation target.

The Policy Board of the BoJ voted 8-1 to maintain the annual pace of increase in the monetary base at about JPY 80 trillion.

Rebounding from an early 2-day low of 1.5681 against the pound, the greenback rose to 1.5616. If the greenback extends rise, 1.55 is likely seen as its next resistance level. The pound-greenback pair finished Thursday's deals at 1.5665.

The U.K. budget deficit narrowed in November, yet a considerable improvement is required to meet the government's fiscal target for 2014/15, according to the Office for National Statistics.

Public sector net borrowing excluding interventions declined by GBP 1.6 billion from last year to GBP 14.1 billion in November.

Having fallen to a 2-day low of 1.1566 against the Canadian dollar at 12:00 am ET, the greenback bounded back with pair trading at 1.1598. At Thursday's close, the pair traded at 1.1574. The greenback is poised to test resistance around the 1.175 mark.

Looking ahead, Chicago Federal Reserve Bank President Charles Evans is due to open a conference on regional competitiveness in Chicago at 10 am ET.

The Kansas City Federal Reserve is scheduled to release its manufacturing index for the region at 11 am ET. Economists expect the manufacturing index to rise to 8 from 7 in the previous month. Richmond Federal Reserve Bank President Jeffrey Lacker will take part in a panel discussing economic outlook in Charlotte, North Carolina at 12:30 pm ET.

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