* Graphic: World FX rates in 2020https://tmsnrt.rs/2RBWI5E By Iain Withers LONDON, Dec 4 (Reuters) - The dollar was headed for its worst week in a month on Friday after plumbing a 2-1/2 year low, as investors bet the greenback has further to fall and that the worst of the COVID-19 pandemic could be over within months. A flurry of positive vaccine news has helped drive a rally in riskier currencies, while actions taken by the Federal Reserve have weakened the dollar. The dollar index hit a low of 90.504 on Thursday and is on track for a more than 1% fall over the week. It was last broadly flat on the day at 90.628.=USD "It has been another bad week for the US dollar," analysts at MUFG said in a note. "It will encourage speculators to rebuild short US dollar positions which have been pared in recent months." Investors have turned heavily short dollars, figuring rates will stay low for a long time in the United States forcing yield-seekers to head elsewhere for better returns. Investors will get a further indicator of how the U.S. economy is holding up at 1330 GMT, with monthly payrolls data expected to show employment growth, but at a slower pace. The euro has been one of the biggest winners from recent dollar weakness, breaking decisively above $1.20 this week and is on track for a more than 2% weekly gain.EUR=EBS The single currency was up 0.2% on the day, at $1.2168. "The euro is holding above the $1.21 level for the first time since spring 2018, despite the fact that there is only a week to go before the European Central Bank is expected to add more policy stimulus," said Rabobank strategist Jane Foley. The yenJPY= was broadly steady against the dollar on Friday, while sterling edged down against both the dollar and euro with Brexit trade talks between the UK and European Union at a critical stage.GBP=D3 EURGBP+D3 (Reporting by Iain Withers, Additional reporting by Tom Westbrook in Sydney; Editing by Kim Coghill) ((Iain.Withers@thomsonreuters.com;))

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