The dollar trod water against a group of peers early on Friday, as currency investors remained cautious ahead of U.S. inflation data due later in the session, which is expected to set the greenback`s near-term direction.
The U.S. currency`s recent advance, notably against the yen, has stalled towards the end of this week as Federal Reserve Chair Janet Yellen curbed some of the monetary tightening expectations that had supported the greenback.
Signs of a pickup in U.S. inflation could reinforce views that the Fed would hike interest rates again sooner rather than later, which would lift Treasury yields and the dollar.
However, the core consumer price index (CPI) is forecast to have risen only 1.7 percent year-on-year in June after a similar gain in May. On a month-on-month basis, the core CPI is expected to rise 0.2 percent after a 0.1 percent gain the previous month.
"After their June rate hike, the Fed is seen watching inflation trends carefully before tightening policy again. So market interest towards inflation data is very high and the dollar is likely to move widely in either direction," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
The dollar index against a basket of major currencies was flat at 95.766 <.dxy>, poised to end the week 0.25 percent lower.
The greenback was a shade higher at 113.425 yen
The euro was flat at $1.1403
"The euro has become top heavy over the past few days with participants unwinding some of the bloated long positions built up recently. But the euro is still likely to begin probing highs again on speculation that the ECB would begin normalising policy," Yamamoto at Mizuho Securities said.
The common currency had set a 14-month high of $1.1489 on Wednesday on views that the ECB would begin reversing its very easy monetary policy sooner rather than later.
The Australian dollar touched a four-month peak of $0.7746
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)