The U.S. dollar strengthened against its major counterparts in the European session on Friday, as the nation's consumer inflation improved more than forecast in August due to the resumption of activity after COVID-led shutdown.

Data from the Labor Department showed that the consumer price index climbed by 0.4 percent in August after advancing by 0.6 percent for two straight months. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices still rose by 0.4 percent in August following a 0.6 percent increase in July. Core consumer prices were expected to edge up by 0.2 percent.

The greenback showed mixed trading in the Asian session, by falling against the euro and the pound but holding steady against the franc. Versus the yen, it advanced.

The greenback bounced off to 0.9103 against the franc, from a low of 0.9080 set at 5:45 am ET. The greenback is seen finding resistance around the 0.95 mark.

The greenback staged a modest recovery against the euro, with the pair trading at 1.1835. This followed a low of 1.1874 logged at 5:50 am ET. The pair closed deals at 1.1815 on Thursday. The next possible resistance for the greenback is seen around the 1.16 level.

Data from Destatis showed that German consumer prices were unchanged in August after a modest decline in July.

The consumer price index was unchanged on a year-on-year basis, after a 0.1 percent fall in July. Compared to the previous month, the index decreased 0.1 percent.

The greenback rose back to 1.2786 against the pound, heading towards nearly a 2-month peak of 1.2762 hit at 5:00 am ET. Should the greenback rises further, it may find resistance around the 1.25 level.

Data from Office for National Statistics showed that the UK economy expanded for the third straight month in July as lockdown measures continued to ease.

Gross domestic product expanded 6.6 percent in July from June, when it gained 8.7 percent. GDP was forecast to climb 6.7 percent.

The greenback rebounded to 1.3194 against the loonie, 0.6666 against the kiwi and 0.7284 against the aussie, from its prior lows of 1.3151, 0.6695 and 0.7306, respectively. The greenback may find resistance around 1.33 against the loonie, 0.64 against the kiwi and 0.70 against the aussie.

In contrast, the greenback was trading at 106.15 against the yen, slightly down from a high of 106.27 recorded at 3:20 am ET. On the downside, 104.00 is possibly seen as its next support level.

Data from the Bank of Japan showed that Japan producer prices rose 0.2 percent on month in August - in line with forecasts and down from 0.8 percent in July.

On a yearly basis, producer prices fell 0.5 percent - again matching expectations following the 0.9 percent decline in the previous month.

The U.S. monthly budget statement for August is set for release in the New York session.

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