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The dollar clung to modest gains against the euro on Friday after data showed falling U.S. consumer spending and cooling inflation, and as investors awaited a slew of central bank meetings next week.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, dropped 0.2% last month, the Commerce Department said on Friday. Data for November was revised lower to show spending slipping 0.1% instead of gaining 0.1% as previously reported. Economists polled by Reuters had forecast consumer spending dipping 0.1%.

The Commerce Department reported the Federal Reserve's preferred gauge for inflation, the personal consumption expenditures (PCE) price index, rose 0.1% last month after a similar rise in November.

"U.S. PCE landed pretty much as expected and has very little impact on the Fed's upcoming decision," said Simon Harvey, head of FX Analysis at Monex Europe.

"The latest inflation data has allowed Fed officials to guide markets to a slower pace, and given their preference on the duration of restrictive monetary policy, we expect a moderation in price pressures to result in the Fed taking rates to a terminal level of 5% by March," Harvey said.

Traders of futures tied to the Fed's policy rate kept bets on Friday that the U.S. central bank will raise interest rates just once more beyond next week's widely expected quarter-point hike before stopping. The current target range is 4.25% to 4.5%.

The euro was 0.17% lower at $1.08725, but not far from the nine-month high of $1.09295 touched on Monday. For the week, the common currency was up about 0.2%.

Against the yen, the dollar was 0.25% lower at 129.89 yen as hot Tokyo inflation readings spurred bets that a hawkish pivot from the Bank of Japan (BOJ) could be in the offing.

Data showed consumer price inflation in Japan's capital accelerated to a nearly 42-year peak this month, piling pressure on the BOJ to step away from stimulus.

Attention now turns to a slew of central bank policy decisions, with the Fed, European Central Bank and Bank of England (BoE) all due to make rate decisions next week as they judge what policy adjustments may be required in their battle with rampant inflation against a tough global economic backdrop.

"(There is) a lot of event risk on the immediate horizon. Not necessarily in terms of rates for next week, but more the forward guidance central banks will provide," Harvey said.

Sterling slipped 0.12% to $1.2397, amid investor worries that the British economy's slowdown may prompt the BoE to end its tightening cycle soon, a move which might weaken the pound in the short term.

Meanwhile, bitcoin was 1.5% higher on the day at $23,337, on pace to finish the week up about 2.6%, its fourth straight weekly gain, following big losses spurred by the high-profile collapse of the FTX crypto exchange.