By Deborah Levine and William L. Watts, MarketWatch NEW YORK (MarketWatch) -- The dollar pared a loss versus the euro and some major currencies on Friday, pushing the shared currency down after it touched $1.30, as a private survey said consumer sentiment dropped much more than expected in the early part of this month. The weak U.S. data meant that as equities fell -- with the S&P 500 Index (SPX 1,077, -19.88, -1.81%) losing 1.8% -- investors shifting out of riskier assets and into a safe haven were going into Japanese yen. The dollar index (DXY 82.51, -0.05, -0.06%) , which tracks the U.S. unit against a basket of six major currencies, slipped to 82.434 from 82.550 late Thursday. The index recovered after trading as low as 82.085. The euro (CUR_EURUSD 1.2935, +0.0004, +0.0309%) rose just above $1.30 and recently traded at $1.2940 compared with $1.2906 in late North American trading on Thursday. The bounce marks a rebound from below $1.19 last month. Against Japan's currency, the dollar (CUR_USDYEN 86.4600, -0.9600, -1.0982%) fell to ¥86.39 from ¥87.40 Thursday. The British pound (CUR_GBPUSD 1.5308, -0.0132, -0.8549%) fell to $1.5340 from $1.5410 late Thursday. See MarketWatch's currencies page. The University of Michigan/Reuters index of consumer sentiment fell to 66.5 this month from 76 in June. Falling bond yields in the U.S. are serving to weigh on the dollar versus the yen, said Boris Schlossberg, director of currency research at GFT. Read about Treasury bonds. The dollar stayed down after a report showed U.S. consumer prices fell 0.1% in June, in line with analyst expectations. Core prices, excluding food and energy, rose slightly more than predicted but the year-over-year rate remains very low historically and points to a bigger risk of deflation - falling prices -- than inflation. Read about CPI report. That removes one potential reason for the Federal Reserve to raise interest rates, which would support the dollar. "The inflation data will raise more questions at the Fed about too-rapid disinflation (or deflation) risks," economists at RDQ Economics wrote in emailed comments. The policy-setting Federal Open Market Committee maintains an informal target of 1.5% to 2% for consumer inflation, they noted. "Low actual inflation rates are one of the three factors the FOMC cites as warranting exceptionally low rates for an extended period, and there is nothing here to suggest a language change anytime soon," they said. The dollar also stayed down after the Treasury Department said international-capital inflows to U.S. debt in May slowed to $33 billion, primarily going into mortgage-agency bonds. Net foreign purchases of U.S. long-term securities increased in May at the slowest pace since January, according to the Treasury International Capital, or TIC, report. Total holdings of equities, notes and bonds increased a net $35.4 billion in May, down from $81.5 billion in April. See more on TIC data. Euro support At the same time, the euro is benefiting from a number of factors, said Marco Annunziata, chief economist at UniCredit Group. These include a "paradoxical" situation, he said. Despite the fact that the recovery in the U.S. is clearly more robust than in the euro zone, the Fed "sounds more dovish and seems to be toying with the idea of a renewed wave of quantitative easing, whereas the [European Central Bank] sounds cautiously more optimistic and short-term market rates have tentatively begun to edge up," he said. The euro (CUR_EURUSD 1.2935, +0.0004, +0.0309%) rose just above $1.30 and recently traded at $1.2940 compared with $1.2906 in late North American trading on Thursday. The bounce marks a rebound from below $1.19 last month. Against Japan's currency, the dollar (CUR_USDYEN 86.4600, -0.9600, -1.0982%) fell to ¥86.39 from ¥87.40 Thursday. The British pound (CUR_GBPUSD 1.5308, -0.0132, -0.8549%) fell to $1.5340 from $1.5410 late Thursday. See MarketWatch's currencies page. The University of Michigan/Reuters index of consumer sentiment fell to 66.5 this month from 76 in June. Falling bond yields in the U.S. are serving to weigh on the dollar versus the yen, said Boris Schlossberg, director of currency research at GFT. Read about Treasury bonds. The dollar stayed down after a report showed U.S. consumer prices fell 0.1% in June, in line with analyst expectations. Core prices, excluding food and energy, rose slightly more than predicted but the year-over-year rate remains very low historically and points to a bigger risk of deflation - falling prices -- than inflation. Read about CPI report. That removes one potential reason for the Federal Reserve to raise interest rates, which would support the dollar. "The inflation data will raise more questions at the Fed about too-rapid disinflation (or deflation) risks," economists at RDQ Economics wrote in emailed comments. The policy-setting Federal Open Market Committee maintains an informal target of 1.5% to 2% for consumer inflation, they noted. "Low actual inflation rates are one of the three factors the FOMC cites as warranting exceptionally low rates for an extended period, and there is nothing here to suggest a language change anytime soon," they said. The dollar also stayed down after the Treasury Department said international-capital inflows to U.S. debt in May slowed to $33 billion, primarily going into mortgage-agency bonds. Net foreign purchases of U.S. long-term securities increased in May at the slowest pace since January, according to the Treasury International Capital, or TIC, report. Total holdings of equities, notes and bonds increased a net $35.4 billion in May, down from $81.5 billion in April. See more on TIC data. Euro support At the same time, the euro is benefiting from a number of factors, said Marco Annunziata, chief economist at UniCredit Group. These include a "paradoxical" situation, he said. Despite the fact that the recovery in the U.S. is clearly more robust than in the euro zone, the Fed "sounds more dovish and seems to be toying with the idea of a renewed wave of quantitative easing, whereas the [European Central Bank] sounds cautiously more optimistic and short-term market rates have tentatively begun to edge up," he said.

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