The EUR/USD traded on a mildly bullish momentum at 1.1251 in the early European session on Monday, following the debilitating crash recorded on Friday. The forex pair built upon the broad US dollar (DXY) weakness amid lingering fears over the Omicron variant, Fed’s lending rate-hike, and undecidedness over the US President Joe Biden’s “Build Back Better” (BBB) stimulus plan.
The week kicked off with a risk-averse bias by traders, which weighed on the US Treasury yields, which—in turn—exerted bearish pressure on the DXY. However, varying concerns over the ECB vs. The Fed standoff and a scanty economic calendar this week have caused the euro vs. dollar pair to stall.
Meanwhile, the US 10-year Treasury yields fell by three bps to 1.37%, its third consecutive daily drop to a two-week low. As a result, the T-bond coupons also exerted pressure on the DXY, which currently trades down by 0.11% or 96.65 at press time.
EUR/USD Sellers to Benefit from Risk-Off Market Mood
In other news, a 52% spike in COVID cases in the UK and fears over renewed lockdown measures during the Christmas celebrations, along with a virus-led death of a New Zealand resident who took the Pfizer vaccine, continue to rattle recovery efforts by the euro.
In summary, the current risk-off mood favors “fiber” sellers even amid the US Treasury-induced weakness for the dollar. However, with the lack of any market-moving economic data on the calendar this week, traders will likely remain on the sidelines and on the lookout for clear-cut direction biases.
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