Euro Edges Higher Despite Mid-Session Dip, Eyes Fourth Straight Weekly Gain

The euro has trimmed its gains against the US dollar in mid-session trading on Friday, but it still looks set to close out a fourth consecutive week higher. The EUR/USD pair traded near 1.0850, down from a high of 1.0940 earlier in the session, yet still up around 0.8% for the week.

The euro's recent strength is being driven by shifting interest rate expectations between the European Central Bank and the Federal Reserve. While the ECB has signaled a cautious approach to further rate cuts, the Fed has hinted at potential easing later this year, narrowing the yield differential that previously favored the dollar.

This shift in monetary policy expectations is making euro-denominated assets more attractive to investors seeking yields. Additionally, recent economic data from the eurozone, including better-than-expected PMI readings and a modest rebound in industrial production, has eased recession fears.

From a technical perspective, the EUR/USD pair has broken above its 50-day moving average, with analysts noting that a sustained move above 1.0900 could open the door to the 1.1000 psychological level. However, some traders remain cautious due to profit-taking risks and overbought conditions.