The U.S. dollar strengthened against major currencies on Friday as mixed inflation and growth data led traders to price a greater chance of a prolonged pause in Federal Reserve rate cuts. The dollar index rose 0.3% to 104.2 by mid-session New York time. January’s PCE price index, the Fed’s preferred inflation gauge, increased 2.4% from a year earlier, matching expectations but remaining above the central bank’s 2% target. Separately, the initial estimate showed fourth-quarter GDP grew at a 2.1% annualized rate, below the 2.3% forecast. CME Group’s FedWatch tool put the probability of a rate cut at the March meeting at 12%, down from 20% a week earlier, while the chance of a cut by June was 55%. The combination of persistent inflation and moderating growth leaves policymakers balancing price stability with economic expansion. A stronger dollar can affect export competitiveness, multinational earnings, emerging-market currencies, global trade and the cost of dollar-denominated debt. Expectations for higher-for-longer rates may pressure growth stocks and high-valuation sectors while supporting financials and value-oriented industries. Bond yields have risen as near-term rate-cut expectations weakened, and the February jobs report is expected to help shape the currency and broader market outlook.