The U.S. dollar dropped against its major counterparts in the New York session on Friday, as investors await key inflation data due next week for more clues about the potential size of a rate cut in September.

Traders trimmed bets on aggressive Federal Reserve easing following the release of the latest weekly jobless claims data.

Investors focus on a slew of economic data, including CPI, PPI and retail sales due next week to help determine the Fed's rate cut trajectory.

In an interview with the Providence Journal, Boston Fed President Susan Collins said that policy easing should begin soon if inflation continues to cool.

"If the data continue the way that I expect, I do believe that it will be appropriate soon to begin adjusting policy and easing how restrictive the policy is," Collins said.

The greenback fell to 1.0931 against the euro and 0.8632 against the franc, off its early highs of 1.0909 and 0.8671, respectively. The currency may locate support around 1.12 against the euro and 0.85 against the franc.

The greenback touched 1.2773 against the pound, setting a 3-day low. The currency is poised to challenge support around the 1.31 level.

The greenback weakened to 146.26 against the yen, from an early 2-day high of 147.81. The currency is seen finding support around the 142.00 level.

The greenback eased to 1.3721 against the loonie. This may be compared to an early more than 2-week low of 1.3718. If the currency falls further, it is likely to test support around the 1.33 region.

In contrast, the greenback recovered to 0.6566 against the aussie and 0.6004 against the kiwi, from an early more than 2-week low of 0.6605 and a 3-week low of 0.6034, respectively. The currency is likely to locate resistance around 0.64 against the aussie and 0.57 against the kiwi.

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