Euro rose in European trade against a basket of major rivals, recovering for a second session against dollar and hitting one-week high on bullish remarks from ECB President Christine Lagarde, which bolstered the case for a 0.25% rate hike in Europe at the June ECB meeting.
Dollar tumbled for a second session away from 11-week highs after Congress passed the bill raising the US debt ceiling, with all that's left now is President Joe Biden's signature.
Now investors await US jobs data for May, crucial for gauging the probable path ahead for US interest rates in June.
EUR/USD rose 0.2% to 1.0779, the highest since May 24, with a session-low at 1.0756.
Euro rose 0.7% on Thursday, the largest profit since April 12 away from two-month lows hit earlier at 1.0635, following bullish remarks by ECB President Christine Lagarde.
Lagarde
European Central Bank President Lagarde said that inflation remains too high in the euro zone and it's likely to stay so for a long time.
Lagarde added there's no proof that core inflation has reached its peak, noting there's still room for raising interest rates to limit consumer prices.
European Rates
Such remarks boosted chance of a 0.25% interest rate hike at the June 15 meeting, and boosted chance of another rate hike by the ECB in July.
The Dollar
The dollar index fell 0.2% on Friday for another session away from 11-week high at 104.69, marking a week low at 103.40 against a basket of major rivals.
Dollar is losing ground amid improving risk appetite after Congress pass the bill raising the US debt ceiling level until early 2025.
Fed Remarks
Several remarks from Fed officials this week were more bearish than expected, in turn hurting prospects of a US rate hike in June.
US Rates
Currently, there's only a 23% chance of a US Fed rate hike at the next meeting, which chances for no change in policies stand at 77%.