EUR/USD looks to close the day above 1.15 as DXY stays in red below 95.50

• Annual core-PPI rises 2.5% in the U.S. to miss expectations.
• Chicago Fed's Evans voices his support for further rate hikes.
• Italy's finance minister argues that Italy - Germany yield spread doesn't reflect the economy.

After dropping to its lowest level since August 20 at 1.1430 on Thursday, the EUR/USD pair staged a modest recovery on Friday and now remains on track to end the day above the 1.15 mark. As of writing, the pair was trading at 1.1530, adding 0.37% on a daily basis.

The shared currency, which has been struggling to find demand on the Italian budget crisis, took a sigh of relief after Italy's Deputy Prime Minister Matteo Salvini stated that he was ‘absolutely sure’ that the German-Italy 10-year bond spread wouldn’t reach 400 basis points. Furthermore, Italy's finance minister Giovanni Tria said that the excessive yields gains were not a reflection of true economic fundamentals.

Later in the day, the data released by the U.S. Bureau of Labor Statistics showed that the Producer Price Index (PPI) rose 2.6% on a yearly basis to fall short of the market expectation of 2.8%. The core version of the index, which excludes volatile food and energy prices, came in at 2.5% in September following August's 2.3% reading. Nevertheless, markets largely ignored this data and the US Dollar Index came under pressure as the risk-off mood weighed on the T-bond yields and forced the greenback to weaken vs its rivals. The US Dollar Index, which tracks the buck against a basket of six major currencies, touched its lowest level in a week at 95.38. As of writing, the DXY was down 0.2% on the day at 95.48.

On Thursday, the ECB is scheduled to release the accounts of its September monetary policy meeting. Earlier this week, Klaas Knot, the hawkish Governor of the Dutch central bank, argued that the ECB could adopt a forward guiding strategy similar to the Fed by announcing the number of expected rate hikes.

Technical outlook via FXStreet Chief Analyst Valeria Bednarik

The 4 hours chart offers a neutral stance, as the price is stuck to a now directionless  20 SMA, while technical indicators lack directional strength around their midlines. As mentioned on a previous update, the pair should fall below the 1.1460 level to gain downward traction, while only above 1.1530 the upside will look more constructive.

Support levels: 1.1460 1.1425 1.1390  

Resistance levels: 1.1530 1.1565 1.1600