After climbing higher against major peers in the European session, the U.S. dollar retreated on Friday, giving up gains against some counterparts, with traders weighing the prospects for futures interest rate hikes.
In an interview on Thursday, Fed Chair Jerome Powell reiterated that the central bank is considering to raise interest rates by a half point at the coming meetings in June and July.
"If the economy performs about as expected, it would be appropriate for there to be additional 50-basis point increases at the next two meetings," Powell said.
However, he said the central bank isn't "actively considering" a 75 bps move.
In economic releases today, a report from the University of Michigan showed consumer sentiment in the U.S. has deteriorated by much more than expected in the month of May.
The report showed the consumer sentiment index tumbled to 59.1 in May from 65.2 in April. Economists had expected the index to edge down to 64.0.
With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 55.8 in August of 2011.
A separate report released by the Labor Department showed imports prices were unexpectedly unchanged in the month of April, after surging by an upwardly revised 2.9% in March. Economists had expected import prices to climb by 0.6% compared to the 2.6% jump originally reported for the previous month.
The report also showed the annual rate of growth in imports prices slowed to 12% in April from an upwardly revised 13% in March.
The dollar index climbed to a fresh two-decade high at 105.01 but dropped to 104.47 around noon before recovering slightly to 104.57. The index had settled at 104.85 on Thursday.
Against the Euro, the dollar weakened to $1.0405 after having firmed to $1.0383 in the European session.
The dollar is weak against Pound Sterling, having eased to $1.2242. Against the Japanese currency, the dollar strengthened to 129.31 yen, rising from 128.32.
The dollar weakened to 0.6933 against the Aussie, losing more than 1%. The Swiss franc is flat at 1.0027 a dollar, while the Loonie has strengthened to C$1.2918 a dollar, gaining more than 1%, thanks to the sharp rise in oil prices.