EUR/USD retreats to 1.1900 area, clings to large daily gains

• EUR/USD edged slightly lower in early American session.
• EUR/USD remains on track to post highest weekly close since May 2018.
• US Dollar Index struggles to stage a meaningful rebound.

The EUR/USD pair rose to its highest level in more than a week at 1.1920 on Friday but edged slightly lower in the early American session. Nevertheless, the pair continues to cling to strong gains near 1.1900 and remains on track to register its highest weekly close since May 2018.

USD struggles to shake off the selling pressure after US data

The unabated selling pressure surrounding the greenback in the aftermath of FOMC Chairman Powell's speech at the Jackson Hole Symposium allowed EUR/USD to surge higher on Friday.

Powell announced that the Fed will target average inflation as its new policy strategy and noted that they will prioritize employment over inflation. Commenting on this development, "the Fed is all in to support the economy, focusing on employment and ignoring inflation. That is positive for gold and stocks, detrimental for the dollar," said FXStreet analyst Yohay Elam.

Reflecting the broad-based USD weakness, the US Dollar Index dropped to a daily low of 92.20 on Friday. Although the index staged a modest rebound following the macroeconomic data releases, it failed to hold above 93.50 and was last seen losing 0.75% on the day at 93.30.

The US Bureau of Economic Analysis reported that Personal Spending and Personal Income increased by 0.4% and 1.9%, respectively, in July. Meanwhile, the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, rose to 1.3% on a yearly basis in July and came in higher than the market expectation of 1.2%.

Technical levels to watch for