The dollar rebounded broadly on Friday, but was still set for its biggest weekly percentage drop in almost a quarter of a century as dust settled from the Federal Reserve's plans to buy long-term government debt. The euro reversed earlier gains with sentiment undermined slightly by uncertainty over a plan to rescue weaker euro zone members, falling below $1.36. But despite hefty profit-taking on the dollar's losses, the single currency was still on track for its biggest-ever weekly percentage gain. The U.S. Federal Reserve shook markets to the core on Wednesday with a decision to buy $300 billion of longer-term government debt. The move has fanned concerns that a vast expansion to the Fed's balance sheet beyond the current $2 trillion means more and more of the U.S. currency will be created, giving a huge boost to the supply of dollars. While it might be premature to call time on the dollar's spectacular risk-aversion and funding induced rally, several analysts said the Fed's move could well prove to be a turning point. "We're seeing broad-based dollar weakness and we can't say its unjustified particularly... as the dust settles around the Fed's announcement," said Phyllis Papadavid, FX strategist at SG in London. "We're in a situation where not all central banks are going to announce purchases of government securities," she added. By 1200 GMT (8 a.m. EDT), the dollar was up 0.5 percent on the day at 83.543 .DXY. The greenback has fallen roughly 4.7 percent against the basket of currencies this week, heading for its biggest weekly decline since 1985. "Given the huge moves this week, a pull-back is normal, but it is definitely not a trend reversal, because the Fed monetary moves will continue to weigh," said Martin McMahon, FX strategist at Credit Suisse. A fall of 5.2 percent at the close later on Friday would also make this week's dollar plunge the biggest since 1973 when the Bretton Woods system of fixed exchange rates was finally abandoned. EURO EYES RECORD WEEK The euro fell 0.5 percent to $1.3590, having climbed to a peak of $1.3737 on Thursday, its highest since early January. But the common currency was up more than 5 percent from last Friday's $1.2922 close, on course for the biggest increase since its inception in 1999. A senior German lawmaker said earlier that euro zone countries had agreed a rescue plan to prevent members of the currency bloc going bankrupt.

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