EUR/USD bounces off multi-month lows, upsides seems limited
|- A modest USD pullback assisted EUR/USD to stage a modest bounce from multi-month lows.
- Rising bets for an earlier Fed taper, rallying US bond yields should act as a tailwind for the USD.
- COVID-19 jitters might further underpin the safe-haven USD and cap the upside for the major.
The EUR/USD pair managed to rebound around 20-25 pips from four-month lows, albeit lacked any follow-through buying. The pair was last seen trading with modest gains, around the 1.1765 region heading into the European session.
The pair found some support near the 1.1740 region and for now, seems to have stalled its post-NFP downfall to the lowest level since April 5. The uptick was exclusively sponsored by a modest US dollar pullback from two-week tops, though any meaningful recovery remains elusive.
Friday's blockbuster US jobs report fueled speculations that the Fed could start tapering its asset purchases later this year and forced investors to bring forward the likely timing for the Fed policy tightening. This was evident from the ongoing move up in the US Treasury bond yields.
In fact, the yield on the benchmark 10-year US government bond jumped back above the 1.30% threshold. Apart from this, concerns about the economic fallout from the fast-spreading Delta variant of the coronavirus might act as a tailwind for the USD and cap the upside for the EUR/USD pair.
Hence, the attempted recovery could be solely attributed to some intraday short-covering move, which runs the risk of fizzling out rather quickly. In the absence of any major market-moving economic releases on Monday, the EUR/USD pair remains at the mercy of the USD price dynamics.
Later during the early North American session, traders might take cues from scheduled speeches by Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin. This, along with the broader market risk sentiment, might produce some trading opportunities around the EUR/USD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.