LONDON (Reuters) – The U.S. dollar consolidated gains on Friday but was set for its biggest weekly rise in 2-1/2 months as an overnight drop in high-flying U.S. technology stocks fuelled a bout of risk aversion in global markets.

The dollar’s bounce this week comes after weeks of losses which saw the greenback fall to a April 2018 low of 91.74 on Tuesday after the U.S. central bank overhauled its policy framework last week, which would allow it to keep rates lower for longer periods, a negative for the dollar.

“The dollar’s loss-making momentum has stopped a little bit and the recent ECB comments on the euro has also helped but the broader direction of monetary policy making will be a key factor going ahead,” said Ulrich Leuchtmann, analyst at Commerzbank.

Against a basket of currencies =USD, the dollar was trading at 92.774 in early London trading. On a weekly basis, it was up 0.6%, its biggest weekly rise since mid-May.

“Near-term, if this correction in big tech continues, it will impact overall risk and fuel further demand for the dollar,” Mizuho strategists said in a note.

The Nasdaq led the pullback with a decline of almost 5% a day after it and the S&P 500 posted record closing highs. It was the third-biggest one-day fall from a record close and the big losses boosted demand for the greenback’s safe-haven status.[.N]

Data due later on Friday is expected to show U.S. non-farm payrolls grew by 1.4 million in August, which would be slower than the 1.763 million jobs created in the previous month.

There are signs the labour market recovery from the depths of the pandemic is faltering, with financial support from the government virtually depleted.

The dollar’s downtrend will continue for at least another three months due to the outlook for the Fed’s monetary policy, a Reuters poll of analysts showed on Friday.

The dollar’s bounce clipped the wings of the soaring euro EUR=EBS which briefly hit more than 2-year highs above $1.20 this week. It was trading broadly flat at $1.1845 on Friday.

The Antipodean currencies initially fell slightly, tracking the broader loss of investor confidence as a sell-off in U.S. tech shares hit Asian stocks and a closely-watched measure of market volatility hit a 10-week high.

The Australian dollar AUD=D3 steadied at $0.7277, supported after local retail sales accelerated in July.

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