A short-lived surge in the euro dominated this year's last day of trade in major foreign exchange markets on Friday, with dealers citing a handful of orders as driving the dollar to its lowest since Dec. 8.

The euro climbed to as much as $1.07, two full cents higher, and despite an immediate retreat it was still up half a percent on the day at $1.0548 in midday trade in Europe. It was also 1 percent higher at 123.45 yen.

The yo-yo moves overnight prompted analysts to draw parallels with the "flash crash" in October which briefly knocked almost 10 percent off the value of Britain's pound.

As then, the shift came in the period at the start of the Asian day when markets are at their thinnest and the bulk of liquidity available tends to come from the automated computer programmes run by banks and other major houses.

"It looks like it was a combination of thin markets, some year-end rebalancing against the dollar and covering of shorts above $1.05,” Alvin Tan, a strategist with Societe Generale in London, said.

"The fact that banks have reduced the provision of liquidity given regulatory restrictions contributes to this kind of move and makes it slightly more structural. These kinds of crashes are going to be with us for some time."

Further gains for the dollar are one of the big consensus plays for investors going into 2017, although signs of doubt have appeared in recent weeks, with analysts beginning to wonder how much appreciation a Donald Trump White House will tolerate.