The U.S. dollar traded lower against its major counterparts in the Asian session on Friday, along with U.S. treasury yields, as U.S. inflation fears receded and investors bet that any shift in ultra-accommodative policy is unlikely to happen soon.

Overnight data showed that U.S. consumer prices rose 5 percent in May, the biggest annual since 2008 and more than economists had expected.

But it reinforced hopes that rising price pressures will be transitory and the central bank is unlikely to withdraw monetary support any time soon.

Investors await the Federal Reserve's monetary policy meeting next week for more clues about the state of the economy and policy outlook.

U.S. treasury yields fell, with the benchmark yield on 10-year note touching 1.43 percent. Yields move inversely to bond prices.

The greenback weakened to 1.2193 against the euro, 1.2081 against the loonie and 0.7205 against the kiwi, off its early highs of 1.2167, 1.2099 and 0.7180, respectively. The next likely support for the greenback is seen around 1.24 against the euro, 1.19 against the loonie and 0.74 against the kiwi.

The greenback declined to a 9-day low of 0.7771 against the aussie, 2-day lows of 0.8933 against the franc and 1.4185 against the pound, after rising to 0.7745, 0.8950 and 1.4158, respectively earlier in the session. The greenback is seen finding support around 0.80 against the aussie, 0.86 against the franc and 1.45 against the pound.

The greenback held steady against the yen, after having dropped to a 2-day low of 109.30 at the commencement of today's trading session. The pair was worth 109.31 at yesterday's close.

The University of Michigan's U.S. preliminary consumer sentiment index for June will be featured in the New York session.

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