EUR / USD clings to gains near session highs, above 1.2200 ahead of Fed statements

  • The USD’s renewed selling bias helped the EUR / USD capture some new offers on Monday.
  • As US bond yields fell, risk appetite continued to act as a headwind for the USD.

The pair EUR/USD it maintained its offered tone heading into the American session and was last seen near the daily highs around the 1.2210-15 region.

The pair managed to regain positive traction on the first day of a new trading week and fell back above 1.2200, recovering a significant portion of Friday’s losses. The rally was sponsored by the emergence of some new selling around the US dollar and pushed the EUR / USD pair towards the three-month highs hit last week.

The USD struggled to capitalize on its attempted recovery move from the lowest level since January, but instead encountered a new offering amid the ongoing decline in U.S. Treasury yields. This, the underlying bullish sentiment in global financial markets also acted as a headwind for the safe haven dollar.

That said, expectations that mounting inflationary pressure could force the Fed to reduce its emergency stimulus measures helped limit the USD’s deeper losses. This, coupled with relatively weak liquidity conditions, following a holiday in major European markets, prevented bull traders from making aggressive bets around the EUR / USD pair.

Market participants are now awaiting a scheduled speech by Fed Governor Lael Brainard amid the absence of relevant economic releases to move the market. Traders will follow the signs of US bond yields and broader market risk sentiment, which could influence USD price dynamics and provide further momentum to the EUR / USD pair.

Technical levels

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