EUR/USD sits near weekly top, remains below 1.0600 ahead of flash Eurozone CPI

• EUR/USD attracts fresh buying on Friday as the USD slides to over a two-week low.
• Reduced bets for a jumbo ECB rate cut underpin the Euro and also support the pair.
• Traders now look to the flash Eurozone consumer inflation figures for some impetus.

The EUR/USD pair regains positive traction following the previous day's modest downtick and climbs back closer to the weekly top during the Asian session on Friday. Spot prices, however, remain below the 1.0600 mark, which if cleared decisively should set the stage for an extension of the recent recovery from a two-year low touched last Friday.

The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This, in turn, is seen as a key factor lending support to the EUR/USD pair, though bulls seem reluctant ahead of the Eurozone consumer inflation figures. The data could offer hints on the European Central Bank's (ECB) next policy move, which, in turn, will drive demand for the shared currency and determine the next leg of a directional move for the currency pair. 

In the meantime, hawkish comments from ECB's Isabel Schnabel earlier this week, which forced investors to scale back their bets for a more aggressive easing in December, underpins the shared currency and acts as a tailwind for the EUR/USD pair. The markets, however, are still pricing in a small chance for a 50 bps rate cut next month. The expectations were lifted by the release of flash German consumer inflation figures on Thursday, which rose less than expected in November. This, in turn, warrants some caution before placing fresh bullish around the pair. 

Furthermore, expectations that US President-elect Donald Trump's expansionary policies will boost inflation and limit the scope for the Fed to cut rates further, along with geopolitical risk, might help limit losses for the safe-haven buck. This further makes it prudent to wait for strong follow-through buying and acceptance above the 1.0600 mark before positioning for an extension of the EUR/USD pair's multi-day-old uptrend. Nevertheless, spot prices remain on track to snap a three-week losing streak and end on a positive note heading into the weekend.