EUR/USD trades with modest gains around 1.1875 region, lacks follow-through
- A subdued USD price action helped EUR/USD to regain some positive traction on Wednesday.
- COVID-19 jitters helped limit losses for the safe-haven USD and capped gains for the major.
- Investors now look forward to final Eurozone PMI prints and US macro data for some impetus.
The EUR/USD pair edged higher during the Asian session and was last seen trading near the 1.1870-75 region, or daily tops, though lacked any follow-through buying.
Following the previous day's pullback from the vicinity of the 1.1900 mark, the EUR/USD pair attracted some dip-buying near the lower end of a multi-day-old trading range amid a subdued US dollar demand. Investors now seem convinced that the Fed will stick to its ultra-lose monetary policy stance for a longer period. This was reinforced by the recent sharp fall in the US Treasury bond yields to fresh multi-month lows, which continued acting as a headwind for the greenback.
Meanwhile, concerns about the economic fallout from the highly contagious Delta variant of the coronavirus overshadowed the optimism over a $1-trillion US infrastructure investment bill. This was evident from the prevalent cautious mood around the equity markets, which extended some support to the safe-haven greenback and kept a lid on any strong gains for the EUR/USD pair. Investors also seemed reluctant ahead of Friday's release of the US monthly jobs report (NFP).
In the meantime, Wednesday's release of the final Eurozone Services PMI prints for July will be looked upon for some impetus. Traders might further take cues from the US economic docket – highlighting the releases of ADP report on private-sector employment and ISM Services PMI. This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the EUR/USD pair.
Technical levels to watch