- EUR/USD printed biggest single-day gain in 2.5-months on Monday.
- The uptick has neutralized the immediate bearish setup.
- A breakout, however, may remain elusive due to the US-France trade tensions.
EUR/USD jumped 0.58% on Monday, printing its biggest single-day rise since Sept. 17.
Monday's sharp rise to a 12-day high of 1.1090 has neutralized the immediate bearish setup.
The outlook would turn bullish if the pair rises above the Nov. 21 high of 1.1097. That would confirm a double bottom breakout on the daily chart and create room for 1.12. At press time, the pair is trading largely unchanged on the day at 1.1076.
A breakout looks likely if we take into account the dismal US data released on Monday. The Institute for Supply Management said its manufacturing index sank to 48.1% in November from October's 48.3%, confirming a fourth straight month of contraction.
However, the dollar has already suffered losses in response to the weak data and the focus could shift to the renewed trade tensions, in which case, a breakout may remain elusive.
The Trump administration said late Monday it is planning to impose tariffs up to 100% on around $2.4 billion of French goods in retaliation to France's decision to impose tax on digital services.
On the data front, the Eurozone producer price index is scheduled for release at 10:00 GMT and the US ISM-NY Business Conditions Index (Nov) will hit the wires at 14:45 GMT. These data sets rarely have a big impact on the currency markets. The EUR, however, may take cues from speech by European Central Bank's (ECB) member Benoir Coeure scheduled at 17:30 GMT.
Technical levels
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