EUR/USD is gaining above 1.0500, aiming for a sustained move above 1.0550 in the European session this Monday. The latest rise in the currency pair could be connected to a minor drop in the US Dollar across the curve, as the US Treasury bond yields extend to the downside.
Markets remain unnerved amid surging covid cases in China, assuming that the resurgence could disrupt consumption and manufacturing in the world’s second-largest economy.
Additionally, risk appetite was reduced by uncertainty ahead of the major central banks’ monetary policy decisions this week. The US Consumer Price Index (CPI), the Federal Reserve and the European Central Bank (ECB) interest rates decisions will be closely followed in the week ahead.
Safe-haven flows into the US government bonds weigh negatively on the Treasury yields across the curve, eventually dragging the US Dollar Index back below the 105.00 level.