EUR / USD struggles near a multi-month low, well below 1.1300

• The EUR / USD was seen to consolidate its recent losses to the lowest level since the beginning of July 2020.
• Rising COVID-19 infections in Europe weighed on the euro amid a sustained buy in USD.
• Aggressive expectations from the Fed, high US bond yields kept the USD near a 16-month high.

The pair EUR/USD it remained on the defensive for the middle of the European session and was last seen trading at modest losses, around the 1.1275-70 area.

The pair, so far, has struggled to post a significant recovery and stayed within the surprising range of a 16-month low touched on Friday. The shared currency remained on the defensive amid concerns about the economic consequences of the return of COVID-19 restrictions in Europe.

Austria said it would be the first Western European country to re-impose a total lockdown to tackle rising infections, while Germany warned it could do the same. This could provide the European Central Bank with another reason to delay tightening its monetary policy.

By contrast, the US dollar remained high near the highest level since July 2020 and remained well supported by tough expectations from the Fed. Indeed, Fed fund futures indicate the possibility of an eventual rise. rates from the Fed in July 2022 and a high probability of another hike in November.

Market speculation was bolstered by a new boost in US Treasury yields, which, in turn, acted as a tailwind for the dollar. The fundamental context supports the prospects for further losses, although oversold conditions prevented traders from placing further bearish bets.

However, the EUR / USD pair looks vulnerable to prolong its bearish trajectory and any recovery attempt could still be seen as a selling opportunity. Traders are now awaiting the release of the Eurozone Consumer Confidence Index and US Existing Home Sales data for further momentum.

Technical levels