Ella 
The EURUSD was unable to benefit from the strong rise of about 60 points the day before, and the Asian market was slightly bearish on Friday. However, the pair stabilized above the 1.0800 mark and is close to the four-month low hit on Thursday due to dollar weakness.
The U.S. dollar index (DXY), which tracks the greenback against a basket of currencies, consolidated overnight after pulling back from its highest levels since July 30 as U.S. Treasury yields fell. In addition, the continued stabilization of the stock market has also become another factor weakening the safe-haven currency US dollar, limiting the decline of the euro against the US dollar.
Still, growing expectations that the Federal Reserve will continue to cut interest rates modestly as the economy strengthens, coupled with concerns about deficit spending after the U.S. presidential election, are tailwinds for U.S. bond yields. In addition to this, geopolitical risks arising from ongoing conflicts in the Middle East are also bullish for the US dollar and should limit gains in EURUSD.
Meanwhile, preliminary euro zone Purchasing Managers’ Index (PMI) data released on Thursday showed that the euro zone economy stagnated for a second consecutive month in October and inflation slowed. This in turn validates the European Central Bank’s (ECB) view that the de-inflation process is on track and supports the prospect of further policy easing, which could weaken the euro and help suppress the EUR/USD exchange rate.
For now, market participants are looking for some impetus from Germany’s Ifo business sentiment index ahead of the release of U.S. macro data – durable goods orders and a revised University of Michigan consumer confidence index. This, along with US bond yields and broader risk sentiment, will influence USD price dynamics and assist traders to seize short-term opportunities around the EUR/USD pair.
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