(Updates at 0855 GMT)
The dollar held steady on Friday as traders weighed an ambiguous U.S. inflation report and tensions in the Middle East, where the United States and Britain launched air and sea strikes against Houthi targets in Yemen.
The U.S. dollar index =USD , which tracks the currency against six major peers, was flat at 102.24 on Friday. It has risen around 0.9% this month as U.S. data has come in stronger than expected, after falling 2% in 2023.
U.S. consumer prices increased in December as rents continued to rise, edging 0.3% higher for the month and up an annual 3.4%, versus economists' forecast for a 0.2% and 3.2% rise respectively. The dollar climbed after the data but ended Thursday roughly flat.
The euro EUR=EBS was little changed at $1.0974 on Friday. It has fallen around 0.6% so far in 2024 after rising 3% last year.
In cryptocurrencies, bitcoin BTC= last stood mostly unchanged at $45,855, having surged to a two-year high overnight after the U.S. Securities and Exchange Commission on Wednesday gave the green light to offer ETFs linked to bitcoin.
Traders are pricing in a 68% chance for the Fed's first 25 basis-point cut to come in March, according to the CME Group's FedWatch Tool, up from 65% on Thursday despite the stronger inflation figures.
"There are conflicting drivers at the moment," said Carl Hammer, head of asset allocation at SEB Asset Management. "On the one hand we as a house expect risk appetite to do fairly OK... ultimately we think that the dollar will weaken.
"Having said that, it's fairly clear that the U.S. is doing significantly better than Europe and China. So I think we're stuck here around the $1.10 handle in euro/dollar."
Investors were keeping an eye on the Middle East where the U.S. and UK strikes on Houthi targets marked a widening of the fallout from the Israel-Hamas war in Gaza.
Oil prices jumped, with Brent crude LCOc1 up 2.4% at $79.30 a barrel, although there was little obvious reaction in currency markets. Hammer said the focus was simply on other drivers, particularly inflation.
The dollar fell against Japan's yen JPY=EBS , last down 0.17% at 145.01 yen to the dollar.
Sterling GBP=D3 was flat at $1.2767 after data showed growth came in better than expected in November but remained subdued over the last three months.
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