By William L. Watts, MarketWatch LONDON (MarketWatch) -- The dollar traded mainly lower Friday, with the euro rebounding from a 10-month low against the greenback after euro-zone leaders agreed to a standby aid program with the International Monetary Fund for Greece. The dollar index (DXY 81.81, -0.31, -0.37%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, fell to 81.645 from 82.037 in late North American trading Thursday. For the week, the index remains up 1.1%. The euro (CUR_EURUSD 1.3374, +0.0096, +0.7231%) recovered to $1.3402, up from $1.3306 late Thursday. The single currency had slipped to a 10-month low earlier Thursday -- below $1.33 -- after European Central Bank President Jean-Claude Trichet said that an IMF role in the euro zone would be "very, very bad." Trichet was later quoted as saying he was "extremely happy" a deal had been reached, with the euro regaining its footing. Renewed uncertainty over an aid plan for Greece has been a thorn in the euro's side for the past two weeks. The euro started the week above $1.35 and had crawled back toward $1.38 earlier in the month. Read about the Greek rescue plan. Analysts said unresolved issues and expectations that fiscal consolidation across much of the euro zone could pose a deflationary threat remain a negative for the euro. "The euro didn't give the impression that it was at the eve of a major comeback," wrote strategists at KBC Bank in Brussels. The agreement on Greece "may cool the heat short term, but there are quite a lot of issues that are not really cleared out yet. Is the involvement of the IMF a supportive factor or does it illustrate the inability of the EMU to solve its own problems? In the latter case it is also no positive sign for the euro," they said. Meanwhile, the dollar bought 92.68 Japanese yen , off from 92.79 yen late Thursday. The U.S. unit's decline came as Japan's Nikkei 225 Average rallied 1.5% to close out the week, after reaching its highest level in more than a year. Data released Friday showed Japan's consumer price index fell again in February, as the shadow of deflation lingered over the economy, though the drop was generally in line with economists' forecasts. See full story on Japan consumer price index report. Also on the Asian currency front, a senior policy adviser to China's central bank said in an editorial piece in the state-run China Daily on Friday that while a sudden shift in China's yuan exchange rate would harm the country's export sector, China does eventually intend to move toward more flexibility. "China may resume a 'managed float' of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes," wrote Fan Gang, who sits on the monetary policy committee of the People's Bank of China. "This saga is set to roll on for some time, but it does suggest some willingness to adjust the currency," said Mitul Kotecha, forex strategist with Credit Agricole. In Washington, the Treasury Department must decide by April 15 about whether to label China a currency manipulator. Stephen Roach, the chairman of Morgan Stanley Asia, said Friday at a forum in Beijing that he doesn't think Beijing's manipulating the value of the yuan. Roach said that China's trade imbalances are a multilateral problem that cannot be solved through a bilateral adjustment of foreign-exchange values, according to Dow Jones Newswires.

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