The EUR/USD pair retreated slightly on Friday but remained within a narrow range near recent highs as US trading was shortened due to Black Friday.
The US dollar gained some traction across the board, fueled by a recovery of the US bond yields, but moves were limited.
At the time of writing, the EUR/USD pair is trading at the 1.0405 area, virtually unchanged on the day but still on track to post a 0.8% weekly gain.
The US dollar has been on the back foot this week amid expectations of a monetary policy pivot from the Fed starting in December. After US October CPI data showed easing price pressures, the Fed's last meeting minutes revealed most FOMC members are expecting to switch to smaller rate hikes "soon."
The WIRP tool suggests a 50 bp hike is fully priced in for Dec. 14 meeting, but the swaps are starting to price in around 30% odds of a terminal rate near 5.25%.
Next week, Eurostat will release November's HICP from the euro area while the US will publish the nonfarm payrolls report and the PCE price index, which will be crucial for the next Fed decision.
The EUR/USD short-term bias remains bullish from a technical perspective, although indicators have lost momentum and turned flat on the daily chart. The RSI remains above its midline with a slightly positive slope, while the MACD keeps printing steady green bars.
On the upside, the immediate resistance level is seen at the 1.0480-85 zone, followed by the 1.0500 and 1.0600 areas. On the other hand, the following support levels are seen at the 200-day SMA at the 1.0385 area, followed by 1.0300 and the weekly low of 1.0220.
