The U.S. dollar declined against its major counterparts in the New York session on Friday on growing expectations that the U.S. Federal Reserve could start cutting interest rates as early as September.

Softer-than-expected inflation data released on Wednesday increased expectations of an interest rate cut by the Fed in September.

However, Fed officials struck a hawkish tone on interest rate outlook on Thursday.

Federal Reserve Bank of Cleveland President Loretta Mester said that she expects progress on inflation over time, but at a slower pace than seen last year.

New York Fed President John Williams said that it's important not to overemphasize the latest positive news on inflation.

Richmond Fed President Thomas Barkin said he expects inflation to come down but may take some time.

Data from the Conference Board showed that U.S. leading economic index decreased more than expected in April.

The Conference Board said its leading economic index fell by 0.6 percent in April after dipping by 0.3 percent in March. Economists had expected the index to decrease by another 0.3 percent.

The greenback touched 1.2708 against the pound, its lowest level since April 10. The greenback is likely to face support around the 1.29 region, if it falls again.

The greenback fell to 155.24 against the yen and 1.0878 against the euro, from its early 2-day highs of 155.97 and 1.0835, respectively. The greenback is poised to challenge support around 147.00 against the yen and 1.10 against the euro.

The greenback dropped to 1.3601 against the loonie and 0.6692 against the aussie, off its early 2-day highs of 1.3643 and 0.6648, respectively. The greenback is seen finding support around 1.34 against the loonie and 0.68 against the aussie.

Against the kiwi, the greenback reached as low as 0.6135. If the currency falls further, it is likely to test support around the 0.62 region.

The greenback was trading at 0.9077 against the franc, down from an early 3-day high of 0.9098. Next key support for the currency is likely seen around the 0.89 level.

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