• EUR/USD trades higher around 1.0860 due to the retreating US Dollar Index (DXY).
• Traders adopt a cautious stance ahead of the releases of PMIs data.
• US bond yields and downbeat US housing data weaken the Greenback.

EUR/USD trims the previous day’s losses, trading higher around 1.0860 in the Asian session on Wednesday. The EUR/USD pair is experiencing modest strength due to a correction in the Greenback along with the declining United States (US) Treasury yields.

The Euro encountered pressure due to China's economic challenges, yet any signals pointing to potential fiscal stimulus could offer support. EUR/USD traders are maintaining a cautious stance ahead of the upcoming releases of preliminary PMI data from the Eurozone, Germany, and the US later in the day.

The US Dollar Index (DXY), gauging the Greenback's strength against six key currencies, showed its resilience by securing a gain on Tuesday. However, the downtick in the US Treasury yields and downbeat US housing data put pressure on the US Dollar (USD). At the time of writing, the DXY is trading sideways near the 103.50 mark.

US Existing Home Sales (YoY) declined 2.2% to the rate of 4.07M in July, compared to the expectations of 4.15M. The Richmond Fed Manufacturing Index improved in August from -9 to -7, the same as market expectations. The market participants will closely watch the upcoming Jackson Hole annual symposium starting on Thursday, followed by Fed Chair Powell’s speech scheduled to be held on Friday. These events will provide insights into the US economy, offering fresh impetus for placing trades in the EUR/USD pair.