Investing.com -- EUR/USD fell slightly on Monday on a quiet day of trading, as investors continued to raise their bets on a 2016 interest rate hike from the Federal Reserve following a robust jobs report from the Labor Department at the end of last week.
The currency pair traded in a tight range between 1.1072 and 1.1105 before closing the U.S. afternoon session at 1.1084, down 0.03% on the day. The euro is on pace for its fourth winning session versus the U.S. Dollar over the last five trading days. Since voters in the U.K. decided to leave the European Union in a historic referendum on June 24, the pair has remained squarely in a tight range between 1.0950 and 1.1236. During that span, the euro is down fractionally by 0.30% versus its American counterpart.
EUR/USD likely gained support at 1.0959, the low from July 27 and was met with resistance at 1.1233, the high from August 3.
The labor market added 255,000 nonfarm payrolls in July, continuing its rebound from a weak period in May when the U.S. economy only added 24,000 jobs for the month. As the labor market has shown broad signs of improvement in recent months, the odds of a Fed rate hike in the coming months have grown considerably. Notably, hiring in the lagging construction industry picked up at a higher clip in July by 14,000 for the month, even as job gains in the mining sector remained weak. At the same time, jobs in the temporary help category rose by 17,000, providing indications that large pockets of part-time workers could be on the verge of being hired on a full-time basis. Economists also appear to be encouraged by a spike of 0.3% in average hourly wages, which are now up by 2.6% over the last 12 months. Meanwhile, the unemployment rate stayed flat at 4.9%, while the labor force participation rate inched up by 0.1% to 62.8%.
On Monday, the CME Group's (NASDAQ:CME) Fed Watch tool placed the odds of a September rate hike by the Federal Open Market Committee (FOMC) at 18.0%, up sharply from 9% in last Thursday's session prior to the release. The probability of a December rate hike from the FOMC also increased to 40%, up from 29.4% in the middle of last week. The FOMC has held its benchmark Federal Funds Rate steady at a level between 0.25 and 0.50% at each of its first five meetings this year. Last December, the U.S. central bank halted a seven-year Zero Interest Rate Policy by approving its first rate hike in nearly a decade. Any rate hikes by the Fed this year are viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.
Elsewhere, a high court in Italy ruled on Monday that Matteo Renzi can proceed with a referendum on a package of constitutional amendments that could lead to the prime minister's resignation if the measures are defeated. As national polls depict a voter base largely split on the extensive constitutional changes, Renzi's government is expected to schedule a referendum date for sometime between October and December. Much like June's Brexit decision, the vote could wind up having widespread ramifications for future trade policies in Europe.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.20% to an intraday high of 96.42. The index is still down by more than 1% since hitting four-month highs of 97.62 in late-July.