Euro Gives Up Gains Against Dollar but Still on Track for Fourth Consecutive Weekly Gain

The euro gave up earlier gains against the dollar during European trading on Friday, last trading near 1.16741 after hitting an intraday high of 1.1711. The dollar index stabilized after retesting the three-month low set in the previous session, limiting further upside for the euro.

**Dollar's Weak Tone Unchanged**

Despite the dollar stabilizing on Friday, its overall weak pattern has not reversed. With recent signs of cooling inflation continuing to emerge, traders have been scaling back bets on an imminent Federal Reserve rate hike, leaving the dollar index hovering near three-month lows. This macro backdrop provides solid support for EUR/USD, allowing it to remain strong for most of the week.

**Technical Bias Stays Bullish in the Near Term**

From a technical perspective, EUR/USD remains above the 200-day simple moving average and the 61.8% Fibonacci retracement level of the April-to-June decline at 1.1644, keeping the short-term bullish structure intact. This suggests the current pullback may attract fresh buying interest. The broader rebound from the 1.1323 cyclical low remains intact, with the next potential upside target pointing to the 78.6% retracement at 1.1731.

**Euro Also Draws Fundamental Support**

Beyond dollar weakness, the euro itself is receiving some fundamental support. Markets expect that energy-driven inflation pressures could push the European Central Bank toward a more hawkish policy stance. According to reports, Commerzbank has warned that Europe's natural gas storage balance is becoming increasingly tight, raising pressure to import more gas in the coming months and thus lifting price risks, providing additional support for the common currency.