TOKYO (Reuters) – The dollar was facing its first week of losses in three years as new signs of weakness in the US labor market hurt investors’ expectations of the pace of a pandemic recovery.

FILE PHOTO: A representation of the Bitcoin and US dollar banknotes in virtual currency can be seen in front of a stock graph in this illustration from January 8, 2021. REUTERS / Dado Ruvic

Bitcoin was on its way to its best week since the start of the year after it rose to a new record $ 49,000 after Thursday’s news that BNY Mellon was the newest company to introduce cryptocurrencies.

The dollar remained on its rearfoot on Friday, near the two-week lows after weaker than expected weekly US unemployment claims data was released the previous day.

This added to recent concerns that the dollar’s previous rally had priced in too fast a pace of recovery for the US economy.

The dollar index barely changed due to the Chinese New Year at 90.423 in holiday trading, falling 0.6% in a week to its lowest level since Jan 27 at 90.249.

This year, retailers have divided views on how President Joe Biden’s proposed $ 1.9 trillion stimulus package will affect the dollar.

Some see this as a strengthening of the currency as it should accelerate a US rebound versus other countries, while others believe it is a major driver in a global reflation narrative that should raise riskier assets at the expense of the dollar.

“The US economy will do best thanks to fiscal stimulus and faster vaccine use, but ongoing reflationary fiscal and monetary policies will keep DXY on a sustained medium-term bear trend,” Westpac strategists wrote in a customer release on the dollar index.

The euro barely moved at $ 1.21275 and consolidated near that level for a third day as it targeted a 0.6% weekly advance.

The dollar was mostly unchanged at 104.77 yen, down 0.6% from late last week.

Bitcoin surged toward a 23% weekly gain, the largest since the end of January 3, after hitting a new record high of $ 48,696.84 on Thursday.

Reporting by Kevin Buckland; Editing by Sam Holmes