TOKYO, June 24 Reuters The U.S. dollar slipped against its major peers on Friday, on course for its first weekly decline this month as investors continue to assess the path for Federal Reserve policy and whether aggressive rate hikes would trigger a recession.

The safehaven currency also lost support amid improved market sentiment, which saw regional stock markets rise and buoyed riskier currencies like the Australian and New Zealand dollars.

The dollar index, which measures the greenback against six rivals, sank 0.2 to 104.19 in Asia. That undid the previous day39;s 0.19 rise, which was driven mostly by a decline in the euro after weak European factory data reduced bets for European Central Bank tightening.

Recession talk has upset the DXY uptrend, but we don39;t think retracements have legs beyond the low 102s, Westpac strategists wrote in a client note, referring to the dollar index.

Fed Funds is set to rise above 3 by year39;s end, so USD interest rate support should ultimately continue to build, they added. The ECB meanwhile is struggling to contain peripheral spreads and the Eurozone is facing more material stagflation hardship hardly enticing.

Dollar trading has been choppy this week, with markets now betting on more cautious policy action from the Fed after another expected 75 basis point rate increase in July. The dollar index has dropped 0.42 over the period.

Fed Governor Michelle Bowman said on Thursday that she supports 50 basis point hikes for the…