EUR/USD remains above 1.1700 amid ECB's cautious outlook

• EUR/USD edges higher ahead of HCOB PMI data from the Eurozone and Germany.
• The US Dollar gains ground despite the ongoing US government shutdown.
• Senate Democrats are set to block a GOP-backed short-term funding bill again on Friday.

EUR/USD holds ground after two days of losses, trading around 1.1720 during the Asian hours on Friday. Traders await HCOB Purchasing Managers' Index (PMI) data from the Eurozone and Germany due later in the day. Eurozone Producer Price Index (PPI) will also be eyed.

European Central Bank (ECB) policymaker Martins Kazaks said on Thursday that "the current interest rate level is very appropriate" and interest rates can remain unchanged. Kazaks added that uncertainty remains very high and must retain full freedom of action.

The EUR/USD pair maintains its position the US Dollar (USD) advances as traders largely dismiss the concerns over the ongoing US government shutdown. The partial US government shutdown will likely delay the release of key US macro including the US September Nonfarm Payrolls (NFP) report. The US ISM Services PMI and the final S&P Global Services PMI reports are due later on Friday.

The shutdown is expected to extend until next week. Senate Democrats are poised to vote against a GOP-backed short-term funding bill again tomorrow, and the Senate is unlikely to meet this weekend.

The weakness in the US labor market boosts bets on further Federal Reserve (Fed) rate cuts. The CME FedWatch Tool suggests that markets are now pricing in a 97% chance of a Fed rate cut in October and a 91% possibility of another reduction in December.