The US dollar index hovered around 99.4 on Friday, steadying after a volatile session as traders awaited the release of the PCE price index, the Federal Reserve's preferred measure of inflation. The report could offer early signals on whether tariffs are beginning to feed into price pressures, potentially influencing the Fed's next policy decision. On Thursday, government data confirmed the US economy contracted in the first quarter, marking the first negative growth reading in three years, further complicating the Fed's rate outlook.

Meanwhile, San Francisco Fed's Mary Daly said the central bank could still cut rates twice this year, but stressed the importance of holding steady for now to ensure inflation is on track to return to the Fed's 2% target. On Thursday, the dollar initially rallied on news that a federal court ruled President Trump's reciprocal tariffs as unlawful, before reversing course as an appeal court reinstated them, stocking fresh uncertainty around trade policy.

Source: Trading Economics