EUR/USD slips below mid-1.0800s ahead of Eurozone CPI and US PCE Price Index

• EUR/USD attracts fresh sellers on Thursday amid a modest USD strength.
• Bets for smaller Fed rate cuts and elevated US bond yields benefit the USD.
• Diminishing odds for aggressive ECB easing could limit losses for the pair.

The EUR/USD pair meets with some supply during the Asian session on Thursday and erodes a part of the previous day's gains to the 1.0870 area, or a one-and-half-week top. The downtick is sponsored by the emergence of some US Dollar (USD) dip-buying and drags spot prices below mid-1.0800s in the last hour.

The incoming US macro data continues to suggest that the economy remains on a strong footing and supports prospects for a less aggressive policy easing by the Federal Reserve (Fed), which, in turn, helps revive the USD demand. In fact, the ADP reported on Wednesday that private-sector employers added 233K new jobs in October. The growth in employment is expected to boost consumer spending and contribute to overall growth, validating the view that the Fed will proceed with smaller rate cuts.

Separately, the US Bureau of Economic Analysis' initial estimate indicated that the world's largest economy grew by a 2.8% annualized pace during the April-June period, slower than the 3% in the previous quarter. This, however, did little to influence expectations about the Fed's rate-cut path. Adding to this, concerns about increasing US fiscal deficit push the US Treasury bond yields higher, assisting the USD to stall its corrective slide from a three-month top and exerting pressure on the EUR/USD pair. 

Meanwhile, the Eurozone data released on Wednesday showed inflationary pressure in Germany remains sticky. Furthermore, the German economy – the Eurozone's powerhouse – unexpectedly grew by 0.2 % quarter-on-quarter in the third quarter. This forced investors to pare their bets for a jumbo rate cut by the European Central Bank (ECB), which could offer some support to the shared currency and the EUR/USD pair ahead of Thursday's release of the flash Eurozone consumer inflation figures. 

Later during the early North American session, the US Personal Consumption Expenditure (PCE) Price Index could provide fresh cues about the Fed's interest rate outlook and drive the US bond yields. Apart from this, the broader risk sentiment will drive demand for the safe-haven Greenback and contribute to producing short-term trading opportunities around the EUR/USD pair.