The U.S. dollar slipped against the euro on Friday but held on to weekly gains, as investors weighed expected Federal Reserve policy amid signs that tariffs may be starting to increase some inflation pressures and as U.S. President Donald Trump continued to criticise Chair Jerome Powell.

Data on Tuesday showed that consumer prices rose in June, though the increase was seen as moderate. Wednesday's producer price inflation report showed that prices were steady last month.

Powell has said he expects inflation to rise this summer as a result of Trump's tariff policies. His comments have pushed out expectations of when the U.S. central bank is likely to cut interest rates.

But the labor market is showing signs of weakness even as headline job gains and the unemployment rate remain relatively solid.

"We're waiting on the tariffs to become real and not just a negotiating ploy and waiting on the labor market to reveal itself," said Lou Brien, strategist at DRW Trading in Chicago.

"Layoffs are at a lower level than they were pre-pandemic, but the hiring is terrible. And if, all of a sudden, the layoffs come up, we're going to get a significant increase in the unemployment rate very quickly," Brien said.

Fed governor Chris Waller said on Friday that he favors a rate cut at the July meeting because he feels tariffs are likely to have a limited impact on inflation. Waller added that underlying data "are not indicating a super healthy private sector labor market," and the Fed should "get ahead" of a possible hiring slowdown.

Source: Investing.com