The dollar was on track for one of its steepest weekly falls versus major currencies this year on Friday, while the yen strengthened sharply to trade below 150 per dollar as concerns grow about the worsening global economic outlook.
Cooler-than-expected U.S. inflation data on Tuesday helped reset market expectations for how quickly the U.S. Federal Reserve will cut rates and has weighed on the dollar, which is on track for a 1.6% weekly fall - its biggest drop since mid-July. =USD
The index was down 0.2% on the day at 104.14, while the euro edged up 0.1% to $1.08615 after data confirmed year-on-year inflation in the bloc slowed sharply in October. EUR=EBS
The yen - which has been punished broadly by dollar strength - broke the 150 mark versus the dollar for the first time in nearly two weeks. The dollar lost nearly 1% versus the Japanese currency and was last down 0.9% at 149.32 yen. JPY=EBS
Lee Hardman, currency analyst at MUFG, said the yen's strength reflected the fact that "contracting growth concerns are rising" globally, adding that Japanese terms of trade were less impacted by falling energy prices.
Weaker-than-expected retail sales figures in Britain on Friday added to a slew of negative indicators this week, with the pound broadly flat at $1.24230. GBP=D3
Sluggish data globally has raised concerns about economic prospects, but also suggest central banks may be winning out in their fight against soaring prices.
Futures markets were pricing in more than 100 basis points of cuts to U.S. interest rates next year on Friday, moves that have contributed to dollar weakness.
Currency analysts at ING said in a note that the dollar had entered a "consolidative phase" and that a "clear and immediate catalyst" for further euro gains in particular was not obvious.
European Central Bank President Christine Lagarde said on Friday the EU needs a capital markets union, adding that neither heavily indebted governments nor banks can come up with the money needed to make the bloc more productive and independent.
U.S. housing starts data is due later on Friday, with several Federal Reserve policymakers also due to make public comments. In cryptocurrencies, bitcoin BTC=BTSP is set to snap a four-week winning streak with around a 2% weekly fall to $36,223.
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