• EUR/USD is seen consolidating in a narrow range through the Asian session on Monday.
• The formation of a downward-sloping channel on the daily chart favours bearish traders.
• A sustained strength beyond the 1.0700 mark is needed to negate the negative outlook.

The EUR/USD pair struggles to gain any meaningful traction on the first day of a new week and oscillates in a narrow trading band, just above mid-1.0500s through the Asian session.

The prospects for further policy tightening by the Federal Reserve (Fed) trigger a fresh leg up in the US Treasury bond yields, which continues to underpin the US Dollar (USD). Apart from this, expectations that additional ECB rate hikes may be off the table for now act as a headwind for the EUR/USD pair. That said, the risk-on impulse holds back traders from placing fresh bets around the safe-haven Greenback and lends some support to spot prices.

From a technical perspective, the recent downfall witnessed over the past two-and-half months or so has been along a downward-sloping channel and points to a well-established short-term downtrend. Moreover, the Relative Strength Index (RSI) on the daily chart has also recovered from the oversold territory and favours bearish traders. This, along with the occurrence of a death cross, suggests that the path of least resistance for the EUR/USD pair is to the downside.

Some follow-through selling below the daily low, around the 1.0555 area, will reaffirm the negative bias and drag spot prices back below the 1.0500 psychological mark, or the lowest level since January touched last week. The latter coincides with the lower end of the aforementioned trend channel and should act as a pivotal point. A convincing break below will, in turn, set the stage for an extension of the downward trajectory towards testing the 1.0400 round figure.

On the flip side, the 1.0600 mark, closely followed by Friday's swing high, around the 1.0615 region, should cap the immediate upside for the EUR/USD pair. A sustained strength beyond might trigger a short-covering rally and lift spot prices towards the trend-channel barrier, currently pegged near the 1.0700 round figure. Some follow-through buying, meanwhile, will suggest that the pair has bottomed out and shift the near-term bias in favour of bullish traders