Feb 14 (Reuters) - Where the U.S. dollar closes in relation to a key technical level at the end of this week is key for its direction for next week and beyond.

The dollar stabilised near a three-week trough on Friday as traders took solace that Washington's reciprocal tariffs were not immediately imposed, while a U.S. producer price report soothed inflation concerns.

On Thursday the USD index, which tracks the greenback against a basket of six major currencies, registered the biggest daily drop since January 20.

The thick daily cloud, that currently spans 106.660-108.272 region, continues to underpin the USD index. If there is a break and end-of-week close under the 106.660 cloud base, that would shift the overall bias back to the downside.

However if the cloud base remains intact, expect the USD index to stage a sustained recovery, especially as the dollar has room to climb.

For more click on FXBUZ

(Martin Miller is a Reuters market analyst. The views expressed are his own)

((martin.miller@thomsonreuters.com))