• EUR/USD holds gains above 1.1200, with upside attempts capped below 1.1240.
• The pair is on track for the first weekly gain in a month as lower yields and dovish Fed speak have blunted the US Dollar.
• Recent price action suggests that the Euro might have found a bottom at the 1.1115 area

The Euro (EUR) ticks higher against the US Dollar (USD) on Friday and is on track to its first weekly gain in more than one month, as the recent pullback in US Treasury yields and dovish comments by Federal Reserve officials have undermined speculative demand for the Greenback. The pair, however, has been capped at 1.1240 for the second time over the last two days and pulls back to the 1.1220 area ahead of the release of the final Eurozone inflation data for September.

Preliminary data showed that the Eurozone Harmonised Index of Consumer Prices (HICP) accelerated to a 3.8% year-on-year growth in September, from 3.2% in August, boosted by higher Oil prices. The Core HICP showed a more modest increment, to 2.5%, from 2.4% in the previous month.

The US Dollar has been showing a moderately weaker tone over the last few sessions, as lower US yields and dovish comments by Fed policymakers have offset the hot US producer inflation and the strong Retail Sales figures seen on Thursday,

Federal Reserve Chairman Kevin Warsh spoke at the International Monetary Fund (IMF) meeting in Bangkok earlier in the day and showed optimism about economic resilience. Warsh also reiterated the Fed’s commitment to fight inflationary pressures but refused to provide any guidance about the timing or the scope of the monetary tightening cycle.

Technical analysis: Euro shows hints of bottoming activity

EUR/USD trades at 1.1226, with the broader bearish trend intact but the impulsive rebound from the 17-month low at 1.1113 hit earlier this week suggests that the pair might be ripe for a bullish correction. Momentum indicators endorse this view, as the 4-hour Relative Strength Index (14) steadies above the key 50 level and the Moving Average Convergence Divergence (MACD) holds above zero with a modest positive histogram.

Bulls, however, would need to breach Thursday’s high at 1.1240 and the October 2 high at 1.1290 to confirm a trend shift. On the downside, initial support emerges at the intra-day low near 1.1190, ahead of a more important structural base at 1.1113 (October 14 low). A confirmation below here negates the bullish view and increases pressure towards the late May 2025 lows around 1.1050.