EUR/USD consolidates near multi-week top, remains below mid-1.0700s amid modest USD uptick

• EUR/USD enters a bullish consolidation phase near a multi-week high touched on Friday.
• A modest USD uptick turns out to be a key factor that is acting as a headwind for the pair.
• Bets that the Fed will maintain the status quo in December should cap gains for the USD.

The EUR/USD pair oscillates in a narrow trading band during the Asian session on Monday and consolidates last week’s strong gains to its highest level since September 14 touched on Friday. Spot prices, however, remain below mid-1.0700s in the wake of a modest US Dollar (USD) uptick.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, recovers a part of Friday’s heavy losses to a six-week low touched in the aftermath of softer US monthly employment details. The popularly known NFP report showed that the US economy added only 150K jobs in October as compared to 180K anticipated and the previous month’s reading was also revised down to 297K from 336K reported originally.

The data reinforced market expectations the Federal Reserve (Fed) is likely to hold interest rates steady again at its December meeting and led to a further decline in the US Treasury bond yields. Apart from this, the prevalent risk-on environment turns out to be another factor weighing on the safe-haven Greenback. That said, extremely oversold conditions on hourly charts hold back traders from placing fresh bearish bets around the USD.

Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for the Greenback is to the downside and supports prospects for a further near-term appreciating move for the EUR/USD pair. Moving ahead, marking participants now look to the release of the final Eurozone Services PMI, which might influence the USD price dynamics and produce short-term trading opportunities around the EUR/USD pair.

Technical levels to watch