The U.S. dollar slipped against its major counterparts in the European session on Friday amid risk appetite, as European shares rose on the back of strong corporate earnings results and optimism over economic reopening from the pandemic.

U.S. treasury yields fell in the wake of mixed data on U.S. consumer and producer inflation in July.

The yield on the benchmark 10-year treasury note dropped 0.015 basis points to 1.352 percent.

Investors await more hints on the Fed's plan to withdraw stimulus after a surge in producer inflation and a drop in jobless claims for the third consecutive week.

Several Fed officials have favored a tapering of the QE program in the coming months given improvement in the labor market and price pressures.

Data from the Labor Department showed that U.S. import prices increased less than expected in the month of July.

The report said import prices rose by 0.3 percent in July after surging up by a revised 1.1 percent in June. Economists had expected import prices to climb by 0.6 percent compared to the 1.0 percent jump originally reported for the previous month.

Meanwhile, export prices shot up by 1.3 percent in July following a 1.2 percent leap in the previous month. Export prices were expected to increase by 0.8 percent.

The greenback weakened to a 3-day low of 0.9197 against the franc, 4-day lows of 1.1769 against the euro and 110.18 against the yen, following its prior highs of 0.9239, 1.1729 and 110.46, respectively. The greenback is seen finding support around 0.90 against the franc, 1.20 against the euro and 108.00 against the yen.

The greenback touched 1.3834 against the pound, falling from more than a 2-week high of 1.3791 seen at 4:30 am ET. If the greenback slides further, 1.40 is possibly seen as its next support level.

Retreating from its early 2-day highs of 0.7330 against the aussie and 0.6995 against the kiwi, the greenback edged down to 0.7354 and 0.7018, respectively. The currency may test support around 0.75 against the aussie and 0.72 against the kiwi.

The greenback pared gains to 1.2513 against the loonie, from a high of 1.2532 set at 7:25 am ET. The greenback is poised to test support near the 1.21 level.

The University of Michigan's preliminary consumer sentiment index for August is set for release at 10 am ET.

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