EUR/USD looks north, could set fresh multi-month high on weak US ISM data
- EUR/USD has established a bullish higher low at 1.1125.
- A break above recent highs near 1.1240 looks likely on weak US data.
- The US ISM non-manufacturing for December is forecasted to print at 54.5.
EUR/USD is looking north, having carved out a bullish higher low in the last two trading days and could rise to five-month highs above 1.1239 if the US data shows deceleration or contraction in the non-manufacturing activity.
The pair jumped 0.34% on Monday as the single currency drew bids on the back of an upward revision to Germany’s services PMI.
Monday's gain validated seller exhaustion signaled by the long tail attached to Friday's candle and confirmed a bullish higher low at 1.1125.
Put simply, the pullback from the recent high of 1.1239 has likely ended and the rally from the Nov. 29 low of 1.0981 has resumed.
The pair, therefore, could revisit 1.1239 and will likely break higher if the US ISM non-manufacturing data for December, due at 15:00 GMT, prints below November's reading of 53.9, signaling deceleration in the activity. A reading below 50 would imply contraction. The market is expecting a print of 54.5.
A big beat on expectations would validate the Federal Reserve's decision to pause rate cuts, sending the US dollar higher across the board.
In Europe, the pair could take cues from the Eurozone retail sales data for November, due at 10:00 GMT. At press time, EUR/USD is trading largely unchanged on the day at 1.1193.
Technical levels