The dollar headed for a second weekly decline after a report Thursday showed U.S. inflation is well below Federal Reserve targets, backing central bank plans for gradual interest-rate increases.

The U.S. currency weakened after the Fed cut its longer-term projections for U.S. borrowing costs Wednesday, dimming the allure of dollar-denominated assets. U.S. core inflation slowed in May and the overall consumer price index was unchanged for the past 12 months while the Fed seeks an annual increase approaching 2 percent.

Bloomberg’s Dollar Spot Index, which tracks the U.S. currency against 10 peers, dropped 0.9 percent this week to 1,164.58 this week as of 10:13 a.m. in Tokyo. The dollar has slid 1 percent to $1.1384 per euro and weakened 0.4 percent to 122.88 yen.

The U.S. currency is still the best performer during the past 12 months among currencies tracked by Bloomberg Correlation-Weighted Indexes, gaining 17 percent. In June, it’s fallen about 2 percent.

Source : Bloomberg