EUR/USD rebounds from session lows, registers small daily gains near 1.1840
- EUR/USD struggles to make a decisive move in either direction.
- US Dollar Index is edging lower for third straight day.
- Coronavirus vaccine optimism helps market mood remain upbeat.
The EUR/USD pair is having a difficult time setting a near-term direction on Monday. After edging lower toward 1.1800 in the early American session, the pair erased its losses and was last seen trading with modest daily gains at 1.1840.
ECB commentary keeps EUR on the back foot
Earlier in the day, risk flows started to dominate financial markets after Moderna announced that its COVID vaccine candidate showed 94.5% effectiveness in the latest trials. However, the shared currency seems to be struggling to take advantage of the upbeat market mood since the European Central Bank (ECB) made it clear that they will act in December.
While speaking at an event on Monday, ECB policymaker Pablo Hernandez de Cos said the foreign exchange moves between the USD and the EUR was something to worry about. De Cos further argued that the monetary accommodation should be increased in order to avoid market fragmentation given the worsening outlook for both the economic activity and inflation.
On the other hand, the greenback came under modest bearish pressure in the second half of the day as Wall Street's main indexes opened decisively higher and helped EUR/USD stage a rebound. At the moment, the S&P 500 Index is up 0.8% on the day and the US Dollar Index is down 0.1% at 92.62.
There won't be any significant macroeconomic data releases featured in the European economic docket on Tuesday. Later in the day, Retail Sales and Industrial Production data from the US will be looked upon for fresh impetus. In the meantime, investors will keep a close eye on political developments in Europe after Hungary and Poland blocked the adoption of the European Union's 2021-2027 budget that includes the recovery fund.
Technical levels to watch for