NEW YORK, Feb 23 Reuters The U.S. dollar index was on track for its first weekly fall in 2024 on Friday as investors took a breather from buying the currency following an almost twomonth rally built on expectations the Federal Reserve will begin cutting rates later than previously expected.

Investors have pushed back expectations for the first Fed rate cut to June, from May, and dramatically reduced how far they see the U.S. central bank cutting its benchmark rate. Fed officials have projected three 25 basis point cuts this year, while markets had priced for as many as seven.

The dollars rally this year has been predicated on the markets converging back to the Fed, said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Traders may also be pricing for the likelihood that economic data will begin to slow. I think starting with the February jobs data, which is due March 8, were going to begin seeing a series of weaker U.S. economic data, Chandler said.

Personal Consumption Expenditures PCE due next week may also provide clues for Fed policy.

The dollar index dipped 0.06 on Friday to 103.86. It has bounced from a fivemonth low of 100.61 on Dec. 28 and is holding below a threemonth high of 104.97 reached on Feb. 14.

The greenback has bounced this year on enduring economic strength and as Fed officials caution against cutting rates too soon as they seek to bring inflation back closer to their 2 annual target.

Now, however, investors are…