The dollar index slipped further below 94.9 on Friday, and was headed for its biggest weekly loss in eight months after investors unwound hawkish bets on the US rates outlook. The December consumer price index rose at the fastest pace in nearly four decades, but failed to support the dollar further as it came in line with expectations and has largely been priced in by the markets.

Federal Reserve chair Jerome Powell also dashed expectations of a more aggressive tightening in a Congressional testimony earlier this week. Meanwhile, investors await more data releases to guide the outlook for monetary policy, as signs of strong economic growth could reinforce a faster pace toward policy normalization.