[SYDNEY] The Australian and New Zealand dollars found a tentative footing against the euro on Friday, but were set for a one per cent weekly loss with charts pointing to further downside.

The euro steadied at A$1.4959, not far from an eight-month peak of A$1.5074 touched on Thursday.

Against the New Zealand dollar, it edged up to NZ$1.6127, having touched a one-year peak of NZ$1.6151 on Wednesday.

The common currency is benefiting from a safe-haven flow due to political tumult in Washington and a sell-off in emerging markets.

The market often uses the Aussie as a liquid proxy to hedge against weakness in emerging markets.

Charts suggest a push north with major resistance at the September peak of A$1.5093.

"We are very bullish the euro, we see it at A$1.6000 by the end of the year," said Ray Attrill, a strategist at National Australia Bank.

"We expect the ECB (European Central Bank) to change its language in June and signal a winding down of its quantitative easing in September or early next year."

After struggling against the Antipodean currencies since late last year, the euro smartly rebounded in February, to stand 13 cents and 16 cents stronger against the Aussie and the Kiwi, respectively.

Against its US counterpart, the Australian dollar steadied at US$0.7421, having been unable to sustain a peak of US$0.7468 when local data on Thursday showed a surprise drop in the jobless rate.

Still, the Aussie was on track for a rise of 0.5 per cent this week, its first increase in one month.

Underpinning the Aussie were firmer prices of iron ore, Australia's top export earner.

Iron ore for delivery to China's Qingdao port was up 0.4 per cent so far this week.

The New Zealand dollar struggled to maintain its recovery to around US$0.6950 on Thursday, sinking to US$0.6883 on Friday as the US dollar strengthened.

The currency, which had finally made it back to the levels before a central bank decision last week sent it to an 11-month low, was now encountering resistance at its previous one-week high.

"The NZD/USD looks locked in a 0.6850-0.6950 range, with prospects for yield convergence (though market pricing in the US has backed off of late) going head-to-head with policy and political uncertainty towards the USD," said Cameron Bagrie, chief economist at ANZ Bank, in a research note.

The Kiwi was poised to gain 0.5 per cent on the week.

New Zealand government bonds gained, sending yields three basis points lower at the long end of the curve.

Australian government bond futures edged up, with the three-year bond contract two ticks higher at 98.230, close to a six-month summit touched on Thursday.

The 10-year contract gained two ticks to 97.4950, having touched a one-month high of 97.5250, while the 20-year contract added three ticks to 96.9150.

REUTERS