The U.S. dollar declined alongside Treasury yields on Friday, as a string of weaker-than-expected U.S. economic data bolstered expectations for multiple Federal Reserve rate cuts this year. The greenback, despite early strength from a U.S.-China trade truce, reversed course after disappointing data on Tuesday and Thursday, including soft retail sales and PPI figures.

The dollar was on track for a fourth weekly loss against the euro, which rose 0.2% to $1.1209, even though it was set to end the week down 0.34%. Analysts noted that while short-term rate correlations have weakened, market sentiment remains bearish on the dollar, with dovish repricing acting as a potential catalyst for renewed short positions. Futures now price in 59 basis points of Fed easing by year-end, up from 49 bps earlier, with a 40% chance of a July rate cut.

The 10-year Treasury yield dropped 5 bps to 4.41%, while the 2-year yield fell to 3.94%. The dollar also slipped 0.45% against the yen and was poised to snap a three-week rally. Elsewhere, the dollar tumbled for a second straight session against the South Korean won, down 0.31% at 1,391, amid reports of Washington-Seoul FX discussions.