The US dollar is losing ground at the start of trading on Friday in Europe, although it remains on track for a positive week, after hotter-than-expected US inflation data.

Hotter-than-expected US inflation data heightened fears that the Federal Reserve may signal aggressive moves next week.

The dollar index, which tracks the performance of this currency against a basket of six other major currencies, is down 0.1% to the level of 102.950, on course for a 0.3% increase for the week, marking its first weekly gain in the last four.

In Europe, the EUR/USD pair is up by 0.2% to the level of 1.0898, following France’s consumer prices rising more than expected in February, up 3.0% annually, with a monthly increase of 0.8%.

The ECB decided to keep interest rates anchored at historic highs of 4% last week, although it may begin cutting them in the coming months given the region’s sluggish growth.

The GBP/USD pair is up by 0.1% to the level of 1.2753, near weekly lows, awaiting the Bank of England’s meeting next week.

In Asia, the USD/JPY pair is up by 0.3% to the level of 148.72, while the yen has fallen by more than 1% this week, amid increasing speculation about the upcoming Bank of Japan meeting, also scheduled for next week.

The US Producer Price Index rose by 0.6% in February, double the expected 0.3%, adding further signals that inflation remains a concern for the Federal Reserve, especially after Tuesday’s release showing consumer prices surged for a second consecutive month in February.

The US central bank is set to meet next week, and indications suggest it will keep interest rates unchanged. However, the unexpectedly high inflation data has investors closely monitoring the Fed’s interest rate projections, commonly known as its dot plot, and remarks from Fed Chair Jerome Powell for clues about the future direction of monetary policy.

Market sentiment now places a 60% probability on the Fed cutting rates in June, down from 74% last week, according to the CME’s FedWatch tool.