EUR/USD looks heavy after Friday's bearish outside day

EUR/USD risks reporting losses on Monday, having charted a bearish outside day candlestick pattern on Friday.

Failed breakout

The pair had closed above 1.1097 on Thursday, invalidating the lower highs setup on the daily chart and confirming a bullish reversal.

The breakout, however, was short-lived, as the pair dived from 1.1110 to 1.1040 during the US trading hours on Friday on the back of a blowout Nonfarm Payrolls figure.

Notably, Friday's high and low engulfed the preceding day's trading range. Essentially, the pair formed a bearish outside day candle, invalidating the bullish breakout and shifting risk to the downside.

Fed to stand pat in 2020

Traders priced out prospects of a 25 basis point Federal Reserve rate cut in 2020 following the release of the upbeat US jobs report.

The dollar will likely remain bid with markets no longer expecting the Fed to cut rates before the November 2020 Presidential Elections.

Trade tensions may hurt the EUR

The data released over the weekend showed China's exports to the US fell by 23% in November, the biggest monthly drop since February.

The dismal number may convince President Trump that his trade war is yielding desired results and he could move ahead with a tariff spike on $160 billion of Chinese goods. The hike is scheduled to take effect from next week.

The fear of the US-China trade war escalation may keep the EUR under pressure. After all, the trade tensions have pushed Germany, the Eurozone's largest economy, on the brink of recession.

The pair is currently trading at 1.1055, representing a marginal loss on the day.

Technical levels