- The EUR/USD pair showed some selling on Monday as demand for the US dollar increased moderately.
- The risk impulse has limited safe-haven dollar values and major currencies’ falls.
- Markets were deterred from new upward trends by disappointing Germany and the Eurozone data.
The EUR/USD price recovered a few pips from its early European session lows and last traded with small intraday losses near 1.1300.
On Friday’s good rebound, the pair struggled to benefit from the 70 pip gain and encountered new stocks on the first day of a new week amid renewed interest in buying the US dollar. As a result of the prospect of faster Fed tightening, the US dollar continued to be a tailwind for the pair.
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Despite the controversy surrounding Friday’s US NFP report, investors appear confident that the Fed will be forced to raise rates sooner rather than later to contain persistently high inflation. Moreover, Fed fund futures suggest that the Fed will repeal by May 2022. Due to that and the spike in yields on US Treasury bonds, the dollar rose modestly.
Despite this, risk dynamics on the financial markets have deterred traders from aggressive upward moves around the safe US dollar and limited further losses for EUR/USD. As reported, reports suggest that the Omicron variant of the Coronavirus variant is only capable of causing relatively mild infections.
According to economic data, German factory orders fell 6.9% month-on-month in October, while Sentix investor confidence in the Eurozone fell from 18.3 in November to 13.5 this month. This level was the lowest since April and had little impact on the EUR/USD pair’s bullish and limited gains, which required some caution when positioning any significant gains.
US economic data will not affect market dynamics on Monday, leaving the dollar at the mercy of US bond yields. However, developments in the Coronavirus saga and general market risk sentiment will also affect the dollar. This will allow traders to take advantage of some short-term opportunities for the EUR/USD pair.
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EUR/USD price technical analysis: Rally capped by 1.1300
The EUR/USD price remains capped by the 1.1300 mark and key SMAs (20 and 50) on the 4-hour chart. The upside lacks follow-through momentum and may fall towards the 1.1260 area ahead of 1.1200. On the flip side, if the price finds acceptance above 1.1300 and 1.1330 hurdles, we may see a jump towards 1.1400.
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