The dollar hovered below a 4-1/2-month high against a basket of major currencies on Friday after tepid inflation data, prompting traders to pare bets of faster U.S. rate hikes.
U.S. consumer prices rose less than expected in April, which would support gradual, rather than more aggressive, rate increases by the Federal Reserve.
The so-called core CPI, which strips out the volatile food and energy components, rose 0.1 percent from previous month, compared to economists’ median forecast of 0.2 percent rise.
The dollar’s index against a basket of six major currencies stepped back to 92.71 from Wednesday’s 4-1/2-month high of 93.42.
The euro jumped back to $1.1918 from Wednesday's 4- 1/2-month low of $1.1823
Against the yen, the common currency rose to 130.38 yen, extending its recovery from its six-week low of 129.24 yen set on Tuesday.
The dollar eased to 109.40 yen from Thursday's high of 110.02 yen and off its three-month top of 110.05 yen touched on May 2.
The Australian dollar, which had been hit by the loss of its long-cherished status as the highest yielding currency in the developed world as U.S. rates have risen, bounced back to $0.7526 from Wednesday’s 11-month low of $0.7413.
The British pound had less luck, falling to $1.3460 on Thursday, its lowest levels in four months, after the Bank of England reduced its growth and inflation outlook for 2018 and 2019 while keeping rates steady as expected.
It was last fetching $1.3518.