The US dollar retreated slightly from an eight-week high against its main rival at the start of the European session.
Compared to a group of currencies, the dollar index, which measures the strength of the greenback, traded slightly lower at around 103.35.
Confidence in the debt ceiling agreement is seen to continue to support the US dollar and the US 10-year treasury yield to remain strong.
However, investors are also wary of any profit-taking activities heading into weekend trading.
At the same time, market focus is now aimed at Federal Reserve (Fed) Chairman Jerome Powell's speech at the upcoming New York session.
Even with the weakening of the US dollar, the euro remains trading at around a seven-week low, while the pound is trading at a three-week low against the greenback.
Meanwhile, the yen pared losses after sliding to a five-month low against the US dollar.
Japan's inflation picked up again in April, where core consumer prices jumped 3.4% from a year earlier.
Additionally, the Aussie dollar recovered slightly from earlier falls, seeing it trade around 0.6650 against the US dollar.
The New Zealand dollar is also trading higher as markets prepare for the Reserve Bank of New Zealand's (RBNZ) policy meeting next week.
In addition, the Canadian dollar traded steady ahead of the release of Canadian retail sales data in March.
