Prior the release of the key U.S. inflation data, the U.S. dollar eked out a small gain in early European trade on Friday, but it now appears likely to suffer a second straight quarterly loss.

The Dollar Index, which gauges the greenback versus its major pairs edged up by 0.1% at 101.860, close to its lowest level in one month.

A 7.7% decline in the fourth quarter of 2022 has been extended by the index's 1.3% year-to-date decline.

Traders have re-evaluated their expectations for future Federal Reserve actions primarily as a result of the turbulence in the U.S. banking industry. They now believe that U.S. interest rates are about to peak, which would reduce the dollar's yield advantage.

EUR/USD was mostly unchanged at 1.0901, following weak German retail sales, but had climbed by 0.5% on Thursday after strong German inflation data boosted expectations that the European Central Bank will still announce rate rises this year.

GBP/USD ticked up by 0.1% to 1.2392 after data revealed that the British economy expanded in the fourth quarter of last year. GDP increased over the prior three months after contracting by 0.3% in the third quarter, which was less than initially estimated.

USD/JPY soared by 0.4% to 133.12.