- EUR / USD witnessed moderate / in-range price action on the first day of a new week.
- Concerns about the third wave of COVID-19 infections weighed on the common currency.
- The bullish market mood undermined the safe-haven dollar and helped limit the slide.
The pair EUR/USD it balanced between tepid gains / minor losses throughout the mid-European session and remained confined to a tight trading range around 1.1750.
A combination of divergent forces failed to provide significant momentum to the major and led to moderate / in-range price action during the first half of trading action on Monday. Concerns about the economic fallout from the third wave of COVID-19 infections in Europe kept euro bulls on the defensive and limited the EUR / USD rally.
Investors remain concerned that pandemic-related restrictions in Europe could derail the fragile economic recovery amid slow vaccinations. In the latest sign of the region’s struggles to keep the coronavirus pandemic under control, France announced late on Wednesday that it would extend lockdown measures to the entire country starting Saturday.
However, a softer tone around the US dollar extended some support to the EUR / USD pair and helped limit deeper losses amid relatively weak liquidity conditions. As investors looked beyond Friday’s successful monthly jobs report (NFP), market optimism was seen as a key factor undermining demand for the safe-haven dollar.
That said, the optimistic outlook for the US economy and a modest rally in US Treasury yields should continue to attract some buys in the USD. This, in turn, suggests that the path of least resistance for the EUR / USD pair remains to the downside and any attempt at a recovery move could still be seen as an opportunity for bearish traders.
The impressive pace of coronavirus vaccines and the Biden administration’s planned stimulus of more than $ 2 trillion has raised expectations for a relatively faster recovery from the pandemic in the United States. This, coupled with speculation about a pickup in US inflation, pushed the benchmark 10-year US government bond yield above the 1.70% level.
Market participants are now expecting the US ISM services PMI to provide further impetus for the reaffirmation of a strong US economic rebound.However, the key focus will be on the FOMC meeting minutes and a scheduled speech from Fed Chairman Jerome Powell on Wednesday and Thursday, respectively, influencing short-term USD price dynamics.
Technical levels
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