EUR/USD steadies near two-week highs favoured by a weaker US Dollar

• The Euro holds gains near two-week highs above 1.1600, supported by a weaker USD.
• German inflation figures confirm that price pressures moderated in October.
• US private employment data added reasons for the Fed to cut interest rates further in December.

EUR/USD shows marginal gains on Wednesday, trading at 1.1685 at the time of writing, not far from the two-week highs above 1.1600 reached on Tuesday, after a downbeat US employment report. German inflation data provided some support to the Euro (EUR), although market moves remain subdued, with investors awaiting the US Congress to pass the bill that would restore government funding.

Germany's Harmonized Index of Consumer Prices (HICP), released earlier on Wednesday, confirmed the preliminary estimations, revealing that consumer inflation remains steady in October at levels broadly in line with the European Central Bank's (ECB) target for price stability. Wholesale Price Index MoM ticked up last month, according to data by Destatis. All in all, endorsing the central bank's monetary policy stance.

Figures released by ADP on Tuesday showed a net loss in private employment of 11,250 jobs in the four weeks ending October 25, highlighting the deterioration of the US labour market and adding pressure on the Federal Reserve (Fed) to lower borrowing costs further at its December meeting.

In Wednesday's economic calendar, ECB Vice President Luis De Guindos and board member Isabel Schnabel will provide some distraction during the European session, while in the US, a slew of Fed speakers might comment on the latest news on employment and give further insight into the bank's rate path.

Daily digest market movers: The US Dollar weakens as Fed easing hopes grow

• The US Dollar is showing a mild bearish tone this week, with investors assuming that official US data will force Fed policymakers to prioritize the labour market over inflation, which confirms the need for a further interest rate cut in December. The US Dollar is extending its pullback from last week's highs, and the Euro (EUR) is drawing support from that.
• German inflation data released on Wednesday confirmed that the HICP grew at a 0.3% pace in October and at 2.3% in the last 12 months, slightly below the 2.4% yearly inflation seen in September.
• Likewise, the German Consumer Price Index accelerated to 0.3% in October from 0.2% in September, although the yearly rate eased to 2.3% from the previous month's 2.4% reading.
• Wholesale Price Index, on the other hand, grew 0.3% in October in Germany, from 0.2% in September, beating expectations of a 0.1% growth. Year-on-year, the index eased to 1.1% from 1.2% in the previous month.
• The US ADP Employment Change 4-week average revealed that businesses shed an average of 11,250 jobs per week up to October 25, providing further reasons for Fed doves to cut interest rates further.
• In Europe, the German ZEW Survey disappointed market expectations on Tuesday. The sentiment about the German economic outlook declined to 38.5 in November from 39.3 in October, against expectations of an improvement to 40. The Current Situation has improved to -78.7 from -80, yet short of the market expectations of a -77.5 reading.

Technical Analysis: EUR/USD approaches trendline resistance at 1.1615

EUR/USD has been appreciating continuously during the last five days. Technical indicators on the 4-hour chart are pointing higher, with the Relative Strength Index (RSI) in the area of 60 and the Moving Average Convergence Divergence (MACD) printing green histogram bars, although bulls are likely to be challenged above 1.1600.

Price action is nearing the top of the descending channel from early October highs, now around 1.1615, which will meet the price near a previous support, in the area of 1.1620-1.1625 (October 28 low). The pair should break those levels to cancel the broader bearish trend and shift the focus towards the October 28 and 29 highs near the area of 1.1670.

Downside attempts are being contained above the 1.1575 session lows for now. Further down, EUR/USD might find support at the 1.1530-1.1540 area (near November 7, 10 lows) ahead of the 1.1500 psychological level and the key support at the November 5 low around 1.1470.