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Tariffs, Russia-Ukraine optimism weigh on greenback

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US retail sales fall more than expected in January

(Updated in New York afternoon time)

By Karen Brettell

NEW YORK, Feb 14 (Reuters) - The dollar was on track for

a weekly loss against the euro on Friday as a delay in the

introduction of trade tariffs planned by U.S. President Donald

Trump raised hopes that they may not be as bad as feared, while

optimism about a peace deal between Russia and Ukraine helped

the single currency rally.

The dollar index also fell to a nine-week low after data

showed that retail sales fell more than expected in January,

leading traders to raise bets that the Federal Reserve may cut

rates two times this year.

"Markets are still hoping that tariff headwinds are not

going to be as significant as perhaps previously feared, then

probably the bigger element this week is enthusiasm about

potential Russia-Ukraine ceasefire and to what extent that might

be positive for European growth in particular," said Vassili

Serebriakov, an FX strategist at UBS in New York.

"The retail sales are probably a tertiary factor, but it's

kept the dollar on the back foot," Serebriakov said.

The euro rose 0.32% to $1.0497 and got as high as

$1.0514, the highest since January 27. It is on pace for a

weekly gain of 1.7%.

The Japanese yen strengthened 0.37% against the

greenback to 152.22 per dollar.

The dollar index was last down 0.35% at 106.72

and on track for a weekly loss of 1.3%. It reached 106.56, the

lowest since December 12.

Trump on Thursday tasked his economics team with devising

plans for reciprocal tariffs on every country that taxes U.S.

imports. Howard Lutnick, Trump's pick for commerce secretary,

said the administration would address each affected country one

by one and said studies on the issue would be completed by April

1.

The broad announcement appeared designed at least in part to

trigger talks with other countries, with a White House official

saying Trump would gladly lower tariffs if other countries

lowered theirs.

U.S. Treasury Secretary Scott Bessent also said on Friday

that the Trump administration is looking beyond tariffs and

non-tariff barriers to examine currency manipulation as it

studies the issue.

Analysts say that tariffs could add to inflation, keeping

the dollar higher as the Fed holds rates higher for longer.

Trump also said on Friday he plans to impose tariffs

on imported cars

around April 2.

The euro and other European currencies have been supported

this week by optimism that Russia and Ukraine will reach a peace

deal.

Trump discussed the war in Ukraine on Wednesday in phone

calls with Russian President Vladimir Putin and Ukrainian

President Volodymyr Zelenskiy.

Friday's retail sales data, meanwhile, comes after

Thursday's producer price report for January pointed towards

lower than previously thought core Personal Consumption

Expenditures Price Index later this month, which is the Fed's

preferred inflation measure.

Futures traders are now pricing in 41 basis points of cuts

for the year, fully reversing a move towards reduced rate cut

expectations after consumer price data came in hotter than

expected on Wednesday.

In cryptocurrencies, bitcoin gained 1.32% to

$97,781.23.

(Editing by Toby Chopra; editing by Diane Craft)