* Dollar supported after jobless claims fell by 16,000
* Dollar/yen resistance at 100 yen still formidable
* Euro still under pressure from ECB rate cut expectations
* Pound near two-month high after UK GDP
By Hideyuki Sano
TOKYO, April 26 (Reuters) - The dollar traded near a four-year high against the yen and kept an upper hand against the euro on Friday after an unexpectedly big slide in U.S. jobless claims alleviated some concerns about a slowdown in the world’s biggest economy.
Major currencies were trading in tight ranges ahead of a Bank of Japan policy meeting and economic outlook report as well as U.S. growth figures later in the day.
The dollar fetched 99.35 yen, up slightly from late U.S. levels and not far off a four-year high of 99.95 yen hit a half a month ago.
The U.S. currency has rebounded from a Thursday low just below 99 yen after data showed the number of new applicants for jobless claims fell by 16,000.
The dollar has risen more than 14 percent against the yen so far this year as Japan pursued aggressive monetary easing to lift the economy.
Still, 100 yen has proved to be a formidable resistance level for the U.S. currency in the past couple of weeks, with selling emerging from players hedging their barrier option positions as well as from Japanese exporters when the level is approached.
But some market players think 100 yen will be broken soon, as some of these barrier options are said to be expiring this week, and as selling from Japanese exporters’ selling could subside during a string of Japanese holidays next week.
“Some people may try to lift the dollar next week, when the market will be thin,” said Bart Wakabayashi, head of forex at State Street.
But others think the dollar’s rally may soon run out of steam, noting that it has failed to break 100 so far despite a lot of bullish predictions.
While the market is focused on a Bank of Japan policy meeting on Friday, most market players doubt it will provide fresh catalysts for the yen to weaken further.
The central bank is expected to keep policy on hold after it unveiled a massive two-year bond buying scheme at its previous meeting on April 4 and to project inflation to rise to around two percent in two years in an economic outlook report.
“The BOJ’s easing will continue for two years but that doesn’t necessary mean the yen will always weaken in the next two years,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
“It’s been almost six months since the yen started weakening so if upcoming U.S. data, such as payrolls data, is weak, the market’s focus could move away from BOJ easing,” he said.
The market will be looking to U.S. GDP data due at 1230 GMT on Friday to see the extent of slowdown in the U.S. economy. Closely watched payrolls data is due on May 3.
The euro stood at $1.3006, off Thursday’s high of $1.3094 and not far from a near-three-week low of $1.2954 hit on Wednesday.
The common currency is under pressure from growing expectations that the European Central Bank may cut rates next month to support the euro zone’s moribund economy.
The British pound held firm after hitting a two-month high on Thursday on a better-than-expected UK growth data. Sterling traded at $1.5434, near Thursday’s high of $1.5480.
Britain avoided recession in the first quarter, wrong-footing some bearish investors, who had expected a weak number that would push sterling lower. The data watered down expectations that the Bank of England will add to its asset-buying program to underpin the economy.