The US dollar is weakening to close out the worst trading week for the greenback in many months. Investors are ditching the buck amid a rally in the US financial markets and the latest data suggesting that inflation is slowing.

In April, the personal consumption expenditure (PCE) price index, which is the Federal Reserve’s preferred inflation measurement, climbed at an annualized pace of 6.3% in April. This is slightly down from the 6.6% spike in March.

On a month-over-month basis, the PCE price index rose 0.2%, down from the 0.9% gain in the previous month.

The core PCE price index, which strips the volatile food and energy sectors, surged 4.9% in April, down from the 5.2% increase in March. The monthly core PCE price index was unchanged at 0.3%.

Perhaps as an indicator that inflation is applying financial pressure on household budgets. Personal spending increased 0.9% in April, while personal income jumped 0.4%.

Wholesale inventories advanced 2.1%, while retail inventories ex Autos rose 1.7%.

Financial markets are cautiously optimistic because if inflation signals are easing, it might prevented the US central bank from being more aggressive than it needs to be to put a lid on 40-year high prices.

The Fed is widely expected to raise the benchmark fed funds rate by 50 basis points at the next two Federal Open Market Committee (FOMC) policy meetings.

The US Treasury market was mixed to end the trading week, with the benchmark 10-year yield down 2.6 basis points to 2.732%. The one-year bill dipped 0.8 basis point, while the 30-year bond tumbled 3.5 basis points to 2.957%.

The US Dollar Index (DXY), which measures the greenback against a basket of currencies, slipped 0.08% to 101.75, from an opening of 101.72. The index is poised for a weekly loss of about 1.3%, paring its year-to-date gain to below 6%.

The USD/CAD currency pair fell 0.3% to 1.2733, from an opening of 1.2771, at 13:13 GMT on Friday. The EUR/USD dropped 0.12% to 1.0717, from an opening of 1.0730.