EUR/USD posts modest gains above 1.1050, traders await US ADP report

• EUR/USD trades firmer near 1.1070 in Wednesday's Asian session. 
• The US ISM Manufacturing PMI came in weaker than expected in September. 
• The Eurozone inflation dropped below the ECB target in September. 

The EUR/USD pair trades with mild gains around 1.1070 during the Asian trading hours on Wednesday. Meanwhile, any signs of rising geopolitical tensions in the Middle East could weigh on riskier assets like the Euro (EUR). Investors will keep an eye on the US ADP Employment Change data for September, which is due later on Wednesday. 

Traders are still assessing the chance of a jumbo rate cut by the US Federal Reserve (Fed) in November after Fed Chair Jerome Powell said the US central bank is not in a hurry and will lower its benchmark rate 'over time.' Financial markets are now pricing in nearly 37.4% odds of a 50 basis points (bps) cut in November, while the possibility of a 25 bps reduction stands at 62.6%, according to the CME FedWatch Tool. 

The downbeat US economic data on Tuesday undermines the Greenback. The US ISM Manufacturing PMI was flat at 47.2 in September, weaker than the expectation of 47.5. The report indicated a continued contraction in the US manufacturing sector. 

Across the pond, the Eurozone inflation eased in September, falling below the European Central Bank's (ECB) target. The Harmonized Index of Consumer Prices (HICP) rose 1.8% YoY in September, compared to 2.2% in August, Eurostat showed Tuesday. This figure marked the lowest figure since April 2021. The eurozone economy may not be out of the woods yet, even though September's inflation rates are promising. The ECB cut the interest rates to 3.50% in September and has also hinted that another cut could be coming in the near future. 

The fears of a wider war in the Middle East could exert some selling pressure on the shared currency and boost safe-haven assets like the USD. Iran launched over 200 ballistic missiles at Israel and Prime Minister Benjamin Netanyahu vows to retaliate against Iran for the missile attack on Tuesday.