USD rose slightly against most other major currencies in the European session on Friday as tensions between Washington and Beijing continued escalating, heightening risk aversion. However, the U.S. currency fell against JPY.

Reuters reported that White House planned to restrict Chana's Huawei Technologies from acquiring semiconductors from U.S. chipmakers. According to the report, the U.S. Commerce Department said it was amending an export rule to "strategically target Huawei's acquisition of semiconductors that are the direct product of certain U.S. software and technology." The department also added the "announcement cuts off Huawei's efforts to undermine U.S. export controls." The report also said that the U.S. Commerce Department extended a temporary license that was set to expire tonight at midnight to allow U.S. companies to continue doing business with Huawei through August 13, but warned that this would be the final extension.

Meanwhile, China's Global Times editor-in-chief tweeted that "if the U.S. further blocks key technology supply to Huawei, China will activate the "unreliable entity list", restrict or investigate US companies such as Qualcomm, Cisco and Apple, and suspend the purchase of Boeing airplanes".

Worries about global economic recovery also continued to weigh on market sentiment. Most countries that have eased their COVID-19 restrictions recorded increases in new cases. This dented investors' optimism that major economies could quickly return to "normal".

Traders are also awaiting a raft of important U.S. macro data, including retail sales (12:30 GMT), industrial output (13:15 GMT) and Reuters/Michigan consumer sentiment index (14:00 GMT).