• EUR/USD struggles to gain any meaningful traction on Friday and hangs near the weekly low.
• Economic woes act as a headwind for the Euro, though subdued USD demand lends support.
• Traders also seem reluctant ahead of the key inflation figures from the Euro Zone and the US.

The EUR/USD pair lacks any firm intraday direction and oscillates in a narrow trading band around the 1.0860-1.0865 area or the weekly low through the Asian session on Friday. Traders now seem to have moved to the sidelines ahead of the crucial inflation figures from the Euro Zone and the United States (US) before placing fresh directional bets.

The flash version of the Euro Zone Harmonized Index of Consumer Prices (HICP) is scheduled for release at 09:00 GMT and is anticipated to decelerate to the 5.6% YoY rate in June from 6.1% in the previous month. The Core CPI, however, is expected to rise from 5.3% to 5.5% and reaffirm bets for an interest rate hike at the next European Central Bank (ECB) meeting on July 27. In the meantime, worries about economic headwinds stemmign from rapidly rising borrowing costs act as a headwind for the shared currency and cap the EUR/USD pair.

Later during the early North American session, traders will take cues from the US Personal Consumption Expenditures (PCE) Price Index. The data will influence market expectations about the Federal Reserve's future rate-hike path, which, in turn, will drive the US Dollar (USD) demand and determine the near-term trajectory for the EUR/USD pair. Ahead of the key data risks, the USD takes a brief pause following a two-day strong rally to the highest level since June 13 and is seen lending some support to the EUR/USD pair, at least for the time being.

The US central bank, meanwhile, had signalled that borrowing costs may still need to rise as much as 50 bps by the end of this year and the outlook was reaffirmed by Fed Chair Jerome Powell this week. Adding to this, Thursday's upbeat US economic data cemented expectations for a 25 bps lift-off at the July 25-26 FOMC policy meeting. This, in turn, remains supportive of elevated US Treasury bond yields, which continues to act as a tailwind for the Greenback and should contribute to keeping a lid on any meaningful upside for the EUR/USD pair