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  • Renewed USD selling bias assisted EUR/USD to catch some fresh bids on Monday.
  • Sliding US bond yields, risk-on mood continued acting as a headwind for the USD.

The EUR/USD pair maintained its bid tone heading into the North American session and was last seen hovering near daily tops, around the 1.2210-15 region.

The pair managed to regain positive traction on the first day of a new trading week and moved back above the 1.2200 mark, recovering a major part of its Friday’s losses. The uptick was sponsored by the emergence of some fresh selling around the US dollar and pushed the EUR/USD pair back closer to three-month tops touched last week.

The USD struggled to capitalize on its attempted recovery move from the lowest level since January, instead met with some fresh supply amid the ongoing decline in the US Treasury bond yields. Apart from this, the underlying bullish sentiment in the global financial markets further acted as a headwind for the safe-haven greenback.

That said, expectations that rising inflationary pressure might force the Fed to taper its emergency stimulus measures helped limit any deeper USD losses. This, along with relatively thin liquidity conditions, on the back of a holiday in major European markets, held bullish traders from placing aggressive bets around the EUR/USD pair.

Market participants now look forward to a scheduled speech by the Fed Governor Lael Brainard amid absent relevant market-moving economic releases. Traders will further take cues from the US bond yields and broader market risk sentiment, which might influence the USD price dynamics and provide a fresh impetus to the EUR/USD pair.

Technical levels to watch