EUR/USD Gains Amid Softer USD, Geopolitical Risks Loom

The EUR/USD pair continued its upward trend on Friday, building on the previous day's modest bounce from an over-one-week low. The pair's gains were fueled by a softer US Dollar, which was tempered by signs of cooling US inflation and reduced bets on a Federal Reserve interest rate hike.

According to recent data releases, the US Producer Price Index (PPI) report fell short of estimates, while the Consumer Price Index (CPI) showed softness in overall inflation. This has given the Fed room to hold interest rates steady, which in turn weighed on the USD and supported the EUR/USD pair.

However, geopolitical risks remain a concern for traders, with NATO fighter jets shooting down a drone over Latvian airspace and Russia downing 15 drones near its border with Finland and Estonia. These incidents have heightened tensions in the region and favored USD bulls.