EUR/USD rallies further amid a weak US Dollar ahead of Eurozone's HICP

• The Euro extends gains above 1.1700 on Friday, on track for its best weekly performance in three months.
• The US Dollar remains depressed due to concerns of a Sino-US trade war and Fed easing expectations.
• Later on Friday, the Eurozone HICP is expected to confirm that inflation accelerated in September.

EUR/USD appreciates for the fourth consecutive day, trading near 1.1720 at the moment of writing on Friday and on track to its best weekly performance in the last three months. Market concerns about a Sino-US trade war and further signs that the Federal Reserve (Fed) will be forced to cut interest rates twice in its next two meetings are hurting the US Dollar (USD), while in Europe, all eyes are on September's final Harmonized Index of Consumer Prices (HICP) data.

The trade rift between the US and China keeps gripping markets after the US President, Donald Trump, affirmed that the country is already in a trade war with China, and Treasury Secretary Scott Bessent added fuel to the fire, accusing the Chinese trade negotiator of coming uninvitedly to Washington and behaving in an "unhinged" manner.

Beyond that, Fed Governor Christopher Waller said on Thursday that he favours another interest rate cut in October, while Stephen Miran, Trump's recent pick to the board, reiterated the need for more aggressive cuts. These comments echo the Fed's Beige Book warnings about some economic deterioration and strengthen the case for a series of rate cuts in the coming months, adding pressure to the US Dollar.

In the economic calendar on Friday, the highlight will be the Eurozone HICP, which is expected to confirm that price pressures accelerated in September. During the US Session, the Fed will release its Industrial Production report ahead of a speech by the St. Louis Fed President, Alberto Mussalem.

Daily digest market movers: Trade tensions, Fed cut hopes, and US shutdown hit the US Dollar

• The US Dollar is on track for its worst week in months, weighed by a combination of simmering trade tensions between the US and China, increasing signals that the Federal Reserve will cut rates several times over the coming months, and the lack of progress on government funding, which suggests that the US shutdown will drag out long.
• The Fed's Beige book added pressure on the US Dollar earlier this week, warning about an economic slowdown as consumer spending starts to show signs of weakening and the labour market has stalled, with businesses concerned about the uncertain economic scenario and the impact of higher tariffs.
• The focus now is on the Eurozone final HICP, which is expected to confirm that consumer prices accelerated to a 2.2% year-on-year rate in September from 2% in the previous month, while the core inflation grew at a steady 2.3% yearly rate.
• On Thursday, European Central Bank (ECB) Governor Pierre Wunsch said that probabilities for a further rate cut are receding, while Governor Martin Kocher affirmed that the central bank is " at the end of the rate-cutting cycle or very close to it".
• In France, Prime Minister Sébastien Lecornu survived two no-confidence votes on Thursday, which eased some concerns about the country's uncertain political scenario and provided additional support to the Euro. Nevertheless, he still faces the challenge of passing a tightening budget through a divided parliament before the year's end.

Technical Analysis: EUR/USD might find some resistance at 1.1730

EUR/USD appreciates for the fourth consecutive day and is on track for best weekly performance since mid-July. Price action is about to reach the target of a Double Bottom pattern, at 1.1730, and the 4-hour Relative Strength Index (RSI)is entering overbought levels, which suggests that the pair might take a rest or even witness some profit-taking.

A confirmation beyond the mentioned 1.1730 would clear the path towards the October 1 high, near 1.1780. Further up, the next target would be the September 23 highs, at 1.1820.

On the downside, a potential correction from the last four days' rally might test the reverse trendline, now around 1.1665. Below, Thursday's low, near 1.1640, the round 1.1600 level, and the October 14 low in the area of 1.1545 would emerge as the next support levels.