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TOKYO (Reuters) – The U.S. dollar held firm on Friday after rising overnight, as traders weighed how domestic GDP data that surprised to the upside would impact the Federal Reserve’s rate path and awaited key inflation data later in the day.

The euro, meanwhile, was on the backfoot following the European Central Bank’s (ECB) latest monetary policy meeting on Thursday which held interest rates at a record-high 4%.

In the United States, official data on advance GDP estimate showed gross domestic product in the last quarter increased at a 3.3% annualized rate, overshooting the consensus forecast of 2% growth rate. It also showed inflation pressures subsiding further.

“US GDP data re-affirmed soft landing hopes for the US economy, but the bond market focused more on the disinflation component of the report which pushed yields lower. The dollar, however, held up,” said Charu Chanana, head of currency strategy at Saxo in Singapore.

The dollar index, which measures the greenback against a basket of major currencies, hovered around 103.52 after climbing about 0.2% overnight. It’s gained about 2% so far this year.

U.S. Treasury yields slid, with the benchmark 10-year yield down at 4.11% in the Asian morning. [US/]

Markets are betting there’s a 50% chance of a rate cut in March, according to the CME FedWatch tool, down from 75.6% a month ago.

“Pressure on yields and dollar could increase if December PCE comes in softer than expectations today,” Chanana added.

The euro was last $1.0841, after slipping to a six-week low of $1.08215 on Thursday.

The ECB stood pat at its policy meeting on Thursday as expected, although traders piled on bets that the bank will cut interest rates from April as they interpreted policymakers are growing more comfortable with the inflation outlook.

The ECB’s pushback against market bets of an April rate cut was “less direct and positive direction was noted on wages,” which pushed up expectations and “emphasises a bearish outlook for the euro,” said Chanana.

Sterling consolidated around $1.2703. The Bank of England will announce its latest decision on interest rates next Thursday.

Elsewhere, the was stuck around 147.56 per dollar, after it inched further down overnight from recent lows hit earlier this week after the Bank of Japan took a more hawkish tone.

Data on Friday revealed core inflation in Japan’s capital slowed to 1.6% in January from a year earlier, below the central bank’s 2% target.

“The plunge in inflation to well below 2% in Tokyo last month was broad-based, casting doubt on the Bank of Japan’s willingness to end negative interest rates,” Capital Market’s Head of Asia-Pacific Marcel Thieliant wrote in a note.

The focus in coming months will be on whether wages will rise enough to underpin consumption and help Japan sustainably achieve the Bank of Japan’s 2% inflation.

In cryptocurrencies, bitcoin last fell 0.1% to $39,858.20.