The U.S. dollar drifted lower against its major counterparts in the European session on Friday, as fears over aggressive Fed rate hikes receded after soft U.S. inflation data for April.

Data from the Labor Department on Thursday showed that the consumer price index rose 0.2 percent in April after edging down by 0.1 percent in March. Economists had expected consumer prices to climb by 0.3 percent.

Core CPI edged up 0.1 percent in April after rising by 0.2 percent in the previous month. Core prices had been expected to rise by 0.2 percent.

The data raised expectations that the Fed would continue with its plans for two additional rate hikes this year, instead of aggressive hikes.

Also in focus is the summit between North Korean leader Kim Jong Un and U.S. President Donald Trump that is scheduled on June 12.

Trump said that he had plans of "doing something very meaningful" when both leaders meet for talks aimed to denuclearize the Korean peninsula.

The U.S. export and import prices and flash consumer sentiment index, along with a speech by St. Louis Fed President James Bullard are due later in the day.

The greenback held steady against its major counterparts in the Asian session, with the exception of the yen.

The greenback fell to 1.3554 against the pound, 1.1936 against the euro and 1.0007 against the franc, from its early highs of 1.3502, 1.1891 and 1.0040, respectively. The greenback is likely to find support around 1.38 against the pound, 1.21 against the euro and 0.99 against the franc.

The greenback declined to 1.2746 against the loonie and a session's low of 0.6982 against the kiwi, off its early highs of 1.2773 and 0.6955, respectively. The next possible support for the greenback is seen around 1.26 against the loonie and 0.71 against the kiwi.

Extending early slide, the greenback hit a weekly low of 0.7557 against the aussie. The greenback is seen finding support around the 0.77 level.

Figures from the Australian Bureau of Statistics showed that the total number of owner occupied housing commitments in Australia decreased for the fourth straight month in March.

On a seasonally adjusted basis, total number of owner occupied dwelling commitments dropped 2.2 percent month-over-month in March, faster than the 0.2 percent fall in February.

The greenback fell back to 109.25 against the yen, heading closer to pierce a 2-day low of 109.20 hit at 8:45 pm ET. Next key support for the greenback is likely seen around the 108.00 level.

Data from the Bank of Japan showed that Japan's M2 money stock rose 3.3 percent on year in April, coming in at 1,002.5 trillion yen.

That exceeded expectations for an increase of 3.2 percent following the downwardly revised 3.1 percent gain in March.

Looking ahead, Canada jobs data and U.S. import and export prices, all for April, and University of Michigan's preliminary consumer sentiment index for May are scheduled for release in the New York session.

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