EUR/USD bounces off multi-month lows, upsides seems limited

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