The EUR/USD pair attracts some buying on Thursday and stalls this week's retracement slide from the 1.0965 region, or its highest level since August 11. The buying interest picks up pace following the release of the flash German PMI prints and lifts spot prices to a fresh daily peak, around the 1.0930 region during the early part of the European session.

The preliminary business activity report from the HCOB survey showed that the downturn in Germany's manufacturing and services sectors eased a bit in November. This, in turn, raises hopes that the recession in the Eurozone's largest economy could be shallower than anticipated, which, in turn, boosts the shared currency. Apart from this, the emergence of fresh US Dollar (USD) selling, led by dovish Federal Reserve (Fed) expectations, turns out to be another factor pushing the EUR/USD pair higher.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on its recent recovery from the lowest level since August 31 touched on Tuesday in the wake of bets that the Fed is done raising interest rates. Instead, the current market pricing indicates a greater than 50% chance that the Fed will cut rates by May 2024. This is reinforced by a fresh leg down in the US Treasury bond yields, which exerts downward pressure on the buck and benefits the EUR/USD pair.

The aforementioned fundamental backdrop, along with the European Central Bank (ECB) President Christine Lagarde's hawkish remarks earlier this week, supports prospects for a further near-term appreciating move for spot prices. Speaking at an event in Berlin, Lagarde said that it was too early to declare victory over inflation and that bets based on short-term data flow are premature. This forces investors to scale back their expectations that the ECB's next move is set to be a rate cut.

Source : FX Street