EUR/USD rallies beyond mid-1.1100s, over 1-week tops amid notable USD supply

• Tumbling US bond yields weigh heavily on the USD and helped gain traction.
• The negative German yield curve does little to hinder the ongoing recovery move.
• Traders now eye US ISM non-manufacturing PMI for some short-term impetus.

The EUR/USD pair continued gaining positive traction through the mid-European session on Monday and climbed to over one-week tops, around the 1.1175 region in the last hour.
 
Bulls maintained their dominant position at the start of a new trading week and assisted the pair to build on its recent bounce from the vicinity of the key 1.1000 psychological mark - over 26-month lows set last Thursday in the aftermath of a hawkish rate cut by the Fed. The ongoing slump in the US Treasury bond yields, amid the global flight to safety, weighed heavily on the US Dollar, which was eventually seen as one of the key factors fueling the pair's ongoing short-covering bounce for the third consecutive session on Monday.
 
The US President Donald Trump's unexpected announcement to slap 10% additional tariffs on the remaining $300 billion worth of Chinese imports from September 1, followed by China's warning to retaliate against the new US tariffs resurfaced fears of a full-blown trade war between the world's two largest economies. The latest trade-related developments dampened investors' appetite for perceived riskier assets and the same was evident from a sea of red across equity markets, which boosted demand for traditional safe-haven assets.
 
Meanwhile, the positive momentum seemed rather unaffected by the fact that the entire German yield curve was below zero on Friday. In fact, the German 10-year Bund yield fell well below the European Central Bank's (ECB) negative deposit rate to a record low level of -0.501%, albeit did little to hinder the ongoing recovery move, with the USD price dynamics acting as an exclusive driver of the pair's bullish momentum over the past few trading sessions.
 
Moving ahead, Monday's US economic docket - highlighting the release of ISM non-manufacturing PMI, will now be looked upon for some immediate respite for the USD bulls and produce some short-term trading opportunities later during the early North-American session.

Technical levels to watch