EUR/USD slips as Trump softens China tariff stance, US Dollar recovers

• Trump says high tariffs on China are "not sustainable," boosting the Dollar and easing trade tensions.
• Fed officials Waller, Musalem, and Kashkari signal support for further cuts but warn inflation remains hot.
• Eurozone inflation data meets estimates; traders eye next week's US CPI for fresh direction.

EUR/USD dives 0.17% during the North American session on Friday as the Greenback trims its earlier losses as US President Donald Trump tempered his trade rhetoric on China. The pair trades at around 1.1666 after hitting a daily high of 1.1728.

Euro retreats from daily highs as risk appetite improves and Fed remarks stay cautiously dovish

Risk appetite improved ahead of Wall Street open as US President Donald Trump said that high tariffs on China were not sustainable and most likely increase tensions between the two countries. He added that he plans to meet Xi Jinping at the Asian Pacific reunion in South Korea.

After the headlines, the Greenback erased its earlier losses and rose. The US Dollar Index (DXY), which tracks the performance of the buck's value against a basket of peers, is up 0.09% at 98.42.

The lack of economic data keeps traders leaning on Federal Reserve (Fed) officials crossing the wires. Most of the remarks were slightly dovish, led by Governor Christopher Waller. Meanwhile, St. Louis Fed President Alberto Musalem and Minneapolis Fed Neel Kashkari, although favoring further cuts, stressed that inflation remains hot.

In Europe, the Harmonized Index of Consumer Prices (HICP) was broadly aligned with estimates in September.

Next week, the US economic docket remains empty, but the release of the Consumer Price Index (CPI) figures on Friday is widely awaited by market participants.

Daily market movers: The Dollar appreciates, despite Fed's dovish comments

• Several Federal Reserve officials spoke on Friday, offering a cautiously dovish tone. St. Louis Fed President Alberto Musalem said he supports a rate cut at the October meeting but reaffirmed his full commitment to returning inflation to the 2% target.
•  Fed Governor Christopher Waller echoed Musalem's remarks, while Minneapolis Fed President Neel Kashkari noted that the economy "is not slowing as much as we think," suggesting resilience despite recent data softening.
• Eurozone inflation data came broadly in line with expectations in September, signaling stable price dynamics. Core HICP rose 0.1% MoM and 2.4% YoY, slightly above the 2.3% forecast. Headline HICP also climbed 0.1% on the month and 2.2% on the year, matching both projections and August's readings.
• European Central Bank (ECB) officials maintained a cautious tone on Friday. ECB's Olaf Sleijpen said that policy being "in a good place" does not mean it will stay there, noting that the economy has been more resilient than expected. ECB's Joachim Nagel added that there is no need to act on interest rates for now.
• On Tuesday, Fed Chair Jerome Powell was dovish, acknowledged the weakness of the labor market and added that the central bank should move to more "neutral" interest rates.
• Money markets are fully pricing in a 25-basis-point rate cut at the Fed's October 29 meeting, with odds at 97%, according to the Prime Market Terminal probability tool.

Technical outlook: EUR/USD slips below 100-day SMA, further downside eyed

EUR/USD's technical outlook remains bearishly biased, despite improving somewhat in the week. After reaching a weekly high of 1.1728, the shared currency tumbled below 1.1700, opening the door for further downside.

The EUR/USD first support would be the 100-day Simple Moving Average (SMA) at 1.1648. Once cleared, the next stop would be the 1.1600 figure, followed by 1.1550 and 1.1500.

On the flip side, resistance is seen at the 50-day SMA at 1.1691, 1.1700 and the daily high of 1.1728. A breach of the latter will expose 1.1800 and the July 1 high at 1.1830.