The Euro regains some upside traction against the US Dollar, encouraging EUR/USD to fade part of the recent two-day retracement and climb to daily peaks near 1.0930 on Thursday. On the flip side, the Greenback revisits the 103.60 region when gauged by the USD Index (DXY), giving up part of the recent robust bounce to the area north of the 104.00 hurdle seen on Wednesday. Of note, however, is that the inactivity in the US markets is expected to magnify movements in the FX universe against the backdrop of marginal trading conditions. The dollar’s recent bounce came despite the fact that markets still anticipate a probable interest rate cut by the Federal Reserve (Fed) at some point in the spring of 2024. This view is being supported by persevering disinflationary pressures data as well as a further easing of the labor market.

On the domestic calendar, the flash Manufacturing and Services PMIs in Germany surprised to the upside at 42.3 and 48.7, respectively, for the month of November. In the same direction, advanced Manufacturing and Services PMIs in the broader Eurozone improved to 43.8 and 48.2, respectively. Later in the session, the European Central Bank (ECB) will release its Accounts of the latest meeting. EUR/USD picks up fresh upside traction and retakes the 1.0900 hurdle and above on Thursday. The November high of 1.0965 (November 21) is the immediate target for bulls ahead of the key 1.1000 threshold. Further north, EUR/USD may come into contact with the August top of 1.1064 (August 10) and another weekly peak of 1.1149 (July 27), all preceding the 2023 high of 1.1275 (July 18). Bearish rallies, on the other hand, should find first support at the major 200-day Simple Moving Average (SMA) at 1.0808, followed by the temporary 55-day SMA at 1.0654. The weekly low of 1.0495 (October 13) aligns south of here, before the 2023 low of 1.0448 (October 3). Overall, the pair’s prospects should remain positive as long as it remains above the 200-day SMA.