The dollar slipped to near a one-week low on Thursday after Federal Reserve Chair Jerome Powell's bleak comments on the US economy bolstered expectations of an interest rate cut later this month, which would be the first in a decade.
Since the middle of May, the dollar index has fallen 1.6%, with the greenback down 2.6% against the yen.
The dollar trimmed losses against the yen and euro after data showed US underlying consumer prices rose 0.3% in June, the most in nearly 1-1/2 years, with solid gains in the costs of a range of goods and service.
In another positive economic report, initial weekly jobless claims fell to a seasonally adjusted 209,000 for the week ended July 6, the lowest since April. Economists polled by Reuters had forecast claims rising to 223,000 in the latest week.
"If there was any doubt that the data was really compelling, especially the strong US non-farm payrolls report last week, I think we had our answer yesterday, with Powell's pretty strong argument for easing as soon as July," said Mazen Issa, senior FX strategist at TD Securities in New York.
In mid-morning trading, the dollar index slipped 0.1% to 97.039, after earlier falling to a one-week low.
The dollar was also down 0.2% versus the yen to 108.26 yen, and slipped 0.1% against the Swiss franc to 0.9886 franc.
The euro, meanwhile, was little changed at $1.1253, even as expectations grew that the European Central Bank would loosen policy.
Focus has turned to the release of the ECB's June minutes and whether it has started discussions about a return to asset purchases.
The British pound rose from six-month lows to $1.2535. But it remains down for the week, amid Britain's economic gloom and a fast-approaching Brexit deadline.