Dollar falls for second straight day but still set for weekly gain

The dollar weakened for a second straight session on Friday, as a combination of softer inflation data and a sharp drop in oil prices tempered expectations for further Federal Reserve rate hikes. Despite the two-day decline, the greenback remains on track for a weekly gain and is poised for its strongest monthly performance since March, after hitting a 13-month high earlier this week.

Thursday's data showed a key measure of U.S. inflation met economists' forecasts, while oil prices fell about 4% on Friday, easing some of the upward pressure on interest rate expectations. Markets are still pricing in roughly 25 basis points of rate increases, but the recent moves have moderated the hawkish bets. For currency traders, the dollar's pullback offers a glimpse into how shifting rate expectations can influence major pairs. Traders can track these moves in real time on NowPrice's live FX dashboard.

Looking ahead, the focus will be on the yen, which remains in intervention-prone territory after prolonged weakness. Any further dollar strength could trigger official action from Japanese authorities. Key data releases next week, including U.S. jobs figures and inflation readings, will provide the next catalyst for dollar direction. The interplay between Fed policy expectations and global risk sentiment will continue to drive currency markets in the near term.