A goodish pickup in the USD demand acted as a headwind for EUR/USD on Monday.
The downside remains cushioned as investors seemed reluctant amid thin liquidity.
The EUR/USD pair remained on the defensive heading into the early North American session, albeit has managed to hold its neck above the 1.1300 round-figure mark.
Having failed to make it through the 1.1340-50 resistance zone on Friday, the EUR/USD pair witnessed a subdued/range-bound price action on the first day of a new week. The upside remains capped amid a goodish pickup in the US dollar demand, though the year-end thin liquidity helped limit any deeper losses.
The recent optimism led by reports that the Omicron variant might be less severe than previously feared was overshadowed by uncertainty over the economic impact of the continuous surge in new COVID-19 cases. This, in turn, drove some haven flows towards the greenback and acted as a headwind for the EUR/USD pair.
Apart from this, the Fed’s hawkish outlook, indicating at least three rate hikes next year, further underpinned the greenback. Investors, however, seemed reluctant to place any aggressive directional bets amid absent relevant fundamental catalyst and a rather quiet trading activity due to the year-end holiday season.
Looking at the broader picture, the EUR/USD pair has been oscillating in a broader trading range since the beginning of this month. This further warrants some caution for aggressive traders and makes it prudent to wait for a convincing break through the mentioned before positioning for a firm near-term direction.
Technical levels to watch