By Lisa Twaronite
TOKYO, April 8 (Reuters) - The dollar firmed a little but languished close to 17-month lows against the yen on Friday, with the Japanese currency poised for weekly gains against its major counterparts despite verbal warnings from Japanese officials.
Underpinning the greenback, a less cautious tone from Federal Reserve Chair Janet Yellen reminded investors that U.S. interest rate hikes are likely still in the cards this year, and Japanese Finance Minister Taro Aso let them know direct invention is also possible.
Speaking at a panel with former chiefs of the U.S. central bank, Yellen said late on Thursday that the labour market was "close" to full strength and that inflation was currently held back by temporary factors. She said the economy is on a solid course and still on track to warrant further interest rate hikes. the dollar's big picture still shows expectations of waning strength. A Reuters poll of strategists released on Thursday showed the dollar rally that began in mid-2014 has nearly run its course and will only gain slightly over the coming year, with respondents saying risks to their forecasts are tilted more to the downside. Finance Minister Taro Aso said early on Friday that rapid foreign exchange moves were "undesirable," that the current yen moves were "one-sided," and that Japan would takes steps as needed. words helped the dollar gain about 0.5 percent to 108.73 yen JPY= after dropping as low as 107.67 overnight, its weakest since October 2014. But it was still on track to lose 2.7 percent for the week.
The euro added about 0.3 percent against the yen to 123.54 yen EURJPY=R but was poised to shed around 2.8 percent for the week.
While the odds of direct yen-selling foreign exchange intervention have "slightly risen," strategists at ING said they remain some distance away from any material action ahead of a G7 summit that Japan is hosting in May, unless the dollar were to sharply drop into the 100-105 area.
"More aggressive jawboning will be the near-term option to maintain USD/JPY above 105," they said in a note to clients.
The euro EUR= edged down about 0.1 percent against the dollar to $1.1364 after rising as high as $1.1454 overnight, its highest since October. It was on track for a slight weekly loss.
The dollar index, which tracks the U.S. unit against a basket of six rival currencies, was up about 0.2 percent at 94.619 .DXY , poised for a flat weekly performance.
(Editing by Shri Navaratnam)