• EUR/USD extends gains as the Greenback weakens ahead of the US PCE Price Index.
• The US Dollar may limit its downside as stronger US economic data have reduced rate cut expectations for September.
• The Euro may face challenges as the near-term ECB’s policy outlook remains uncertain.

EUR/USD trades around 1.0860 during the Asian session on Friday, extending its gains after rebounding from a two-week low of 1.0825 recorded on Wednesday. This upside of the EUR/USD pair is attributed to the weakening of the US Dollar (USD) ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index for June.

However, the US Dollar may limit its downside as stronger US economic data have reduced some rate cut expectations for September. On Thursday, the US Gross Domestic Product (GDP) for the second quarter (Q2) was stronger than expected. This follows Wednesday’s US PMI data, which indicated a faster expansion in private-sector activity for July, highlighting the resilience of US growth despite elevated interest rates.