NEW YORK (Reuters) - The dollar advanced against major currencies on Friday, hitting a more than one-week high, after the Federal Reserve allowed a pandemic-driven break on capital requirements lapse, pushing U.S. Treasury yields off their lowest levels of the day. The greenback in recent weeks has risen in line with higher Treasury yields. Since early January, the dollar index, a gauge of its value against six major currencies, has gained about 3.3%, with the benchmark U.S. 10-year note climbing about 80 basis points in the same timeframe. The Fed announced on Friday it would let expire on March 31 a temporary rule directing larger banks to hold more capital against their assets, such as Treasuries. The Fed had put the rule in place to encourage bank lending as American households and businesses were hurt by lockdowns. The dollar index was last up 0.1% on the day at 91.906. It had fallen sharply in the wake of the Fed’s announcement about its loose policy stance on Wednesday. On the week, the dollar climbed 0.6%, posting gains in the three of the last four weeks. “News that the U.S. Treasury SLR exemption is not being extended has given the dollar a little support, again largely via the rise in U.S. Treasury yields,” said ING in a research note. “The near disorderly rise in U.S. Treasury yields at some points this year have certainly undermined a market biased to buy activity currencies on dips. The SLR news certainly adds an element of caution here.” The U.S. 10-year yield rose on Friday after the Fed decision on the leverage rule, but slipped in the afternoon to 1.726%. It hit a more-than-one-year peak of 1.754% in the previous session. The Fed pledged this week to press on with aggressive monetary stimulus, saying a near-term inflation spike would prove temporary amid projections for the strongest U.S economic growth in nearly 40 years. “I see the dollar being a bit firmer today but not outside of its recent ranges,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The underlying macro force is still a divergence. No one can keep up with aggressiveness of U.S. monetary and fiscal policy.” The euro dipped 0.1% to $1.1908 , giving up early gains versus the dollar on concerns about further coronavirus lockdowns in Europe. France imposed a new four-week lockdown from Friday in 16 regions badly hit by the health crisis. The yen was roughly flat at 108.89 per dollar after the Bank of Japan widened its target band for the benchmark yield, a decision that was in line with market expectations. The Japanese currency rose 0.4% against the greenback for the week, its best weekly showing since mid-February. In the cryptocurrency market, bitcoin traded 2%higher at around $58,804, after briefly topping $60,000 again the previous day.