The currency faces a resistance around 109.00, where it has its 200-day moving average. A break-through there could open the way for a retest of its five-month high around 109.50 touched earlier this month.
Rising risk appetite was mildly positive for the euro, which stood at $1.10505 EUR= , bouncing back from one-month low of $1.0989 set on Thursday.
That helped to push down the dollar index =USD to 97.980, near its lowest levels since Nov. 7.
"Currencies will be driven by headlines related to the U.S.-China trade issues. Markets are expecting some sort of answer to that soon," said Yukio Ishizuki, senior strategist at Daiwa Securities.
The "phase one" deal was originally expected to be signed on the sideline of Asian-Pacific countries' summit scheduled last weekend before the host nation Chile cancelled the event due to domestic riots.
The tariff war between the United States and China has already taken its toll on the world's manufacturing sector.
Data from the U.S. Federal Reserve on Friday showed the U.S. manufacturing downturn deepened in October, with output at factories tumbling 0.6%, the most since May 2018, after dropping 0.5% in September.
U.S. retail sales rebounded moderately in October but consumers did cut back on purchases of big-ticket household items like furniture and on discretionary spending.
Still, hopes of a U.S.-China deal have kept investor optimism afloat, with U.S. stock prices hitting a record high on Friday.
Elsewhere, sterling was extending its slow recovery to reach its highest levels in two weeks, trading at $1.2919 GBP=D4 , up 0.12% so far on the day.
Investors will keep an eye on developments in Hong Kong, where police trapped hundreds of protesters inside a major university, sealing off roads in the area after almost two straight days of standoffs that have raised fears of a bloody showdown with both sides refusing to back down.
The turmoil could hit Hong Kong share prices and could dent risk-sensitive currencies in the region, such as the Australian dollar.
The Aussie traded down slightly at $0.6815 AUD=D4 .
(Reporting by Hideyuki Sano. Editing by Lincoln Feast.) ((firstname.lastname@example.org; +81 3 4563 2768;))