Dollar down for second week, Powell’s speech in focus

On Friday, the US dollar fell against its rivals near 93.60 and is set for a second consecutive week of declines. After Thursday's gain, the index retraces the area around 93.60 for the end of the week, resuming its downtrend in response to the pullback in US yields from recent tops.

At 1.7%, yields on 10-year US Treasury notes reached near their highest levels so far this year, while yield differentials between the comparable US and German debt remained at 177 basis points.

A growing expectations that the US Federal Reserve will be among the first to tighten monetary policy before other major central banks also support the greenback in the meantime.

With stocks hitting record highs, investors consider the dollar a safe-haven asset and move their money into riskier currencies.

The euro is still around 1.16500

EURUSD regains upside traction and returns to the 1.1650 zone on Friday on the back of the resumption of selling pressure in the greenback and the upbeat tone in the broad risk aversion mood.

In the meantime, elevated inflation and deteriorating economic conditions, identified as a weakness in key fundamentals, are seen as dampening investors' optimism and crimping bullish attempts in the European currency. These factors keep the EURUSD pair trading within a rangebound between 1.16200 and 1.16600.

Following an advance to the 1.16600 area, the EURUSD pair has lost its momentum for a second time this week, reinforcing the importance of this level in the short term. Despite trading in the upper half of its weekly range, the pair is unlikely to attract buyers unless it breaks above this resistance.

Slowing business growth in Eurozone

As a result of higher costs due to supply-chain disruptions, eurozone business activity slowed this month, while the bloc's dominant service industry struggled amid ongoing concerns about COVID-19.

Purchasing Managers' Index (PMI) for October fell to a six-month low of 54.3 from 56.2 in September, according to IHS Markit.

Additionally, the PMI for the eurozone's services sector plunged to 54.7 from 56.4, the lowest level since April, and below the investors' expectations of 55.5.

As measured by the factory PMI, manufacturing activity remained strong, which fell from 58.6 to 58.5 in September, although the composite PMI fell to 53.2 from 55.6, its lowest reading since June 2020.

For today, investors await a key speech from Chair Powell at 18:00 EEST to get a clue as to the future pace of interest rate hikes and his explanation of new rules on trading restrictions for central bank officials.