The US dollar fell Friday, on track for a hefty weekly loss in the wake of hot inflation data and after President Donald Trump delayed imposing reciprocal tariffs on major U.S. trading partners.

At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.4% lower to 106.815, dropping to a three-week low and on course for a loss of around 1% this week.

Dollar retreats on tariffs delay 

President Trump directed officials on Thursday to formulate plans for reciprocal tariffs on every country that imposes taxes on U.S. imports, but stopped short of immediately announcing tariffs.

This raised expectations that there may yet be room for countries to negotiate, weighing on the U.S. currency as traders have generally seen the imposition of tariffs as being dollar-positive.

“The market knew that the Commerce Department was due to deliver a big report on trade in April and had expected tariffs thereafter,” said analysts at ING, in a note. “But it had also feared that this week's reciprocal tariffs announcement would be a separate workstream and be more immediate. News yesterday effectively laying the groundwork for the April report has therefore been seen as a relief.”

Attention now turns to a gathering of Western powers in Munich later Friday to discuss potential peace in Ukraine, and the terms that would be acceptable to both Kyiv and Moscow, not to mention the U.S. and Europe.

“We think the dollar can stay soft as the focus switches to the security conference in Munich and what it means for any ceasefire in Ukraine,” added ING. “Speculation is building that representatives from the U.S., Russia, Ukraine and perhaps Europe, too, could meet in Saudi Arabia at some stage.”