The euro finished its best month since July against the dollar on Monday but ultimately succumbed to profit taking after narrowly failing to surpass this year's high of 1.2014.
EUR/USD peaked at 1.2004 on EBS in gains encouraged by news that Moderna was applying in the U.S. and E.U. for emergency use of its COVID-19 vaccine, which was 100% effective in preventing severe cases of the disease nL1N2IF0LC.
The retreat before hitting 1.2014, near the monthly cloud top at 1.2021, came amid profit taking on reflation trades that have been benefited from weeks of hopeful vaccine news.
EUR/USD is positively correlated to major risk gauges, but with the S&P 500 on course for its biggest ever November gains, a lot of good vaccine news may already be in the price.
EUR/USD found support near the down trend-line from 2011 it broke above on Friday, currently at 1.1951, but faces the risk of a double-top above 1.20 until it beats its 2020 high.
However, Monday's dollar bounce could prove fleeting if the Fed's decision to extend key emergency liquidity programs through Q1 nL1N2IG15K underpins risk appetite.
Before the euro's pull-back, the dollar index hit two-and-half year lows, possibly foreshadowing a slide to 2018's low of 88.25, at key Fibo support nL1N2IG193, if reflation trades are revived.
Sterling gained on the enduring hope of a Brexit trade deal, even with time to reach one running out nL8N2IG1E3nS8N2HJ0H7.
The bending of the COVID-19 curve in the UK offered some support, but cable remained stuck in a roughly 1.33-34 range below its down trend-line from 2007 at 1.3421.
To clear its 1.3481 pandemic peak, GBP/USD may need news of an actual Brexit deal, especially with so much good news already priced in on that front.
USD/JPY rebounded with the broader reflation trade profit-taking flows, posting the first higher daily high since Nov.
24, but still stuck below the 104.43 daily kijun.
AUD/USD's 0.7408 rejection just below September's 0.7413 pandemic peak was apiece with the day's profit-taking on frothy reflation trades and ahead of Tuesday's RBA meeting, which is expected to be a place-holder.
A close below the tenkan, last at 0.7331, would increase the risk of a correction back to the cloud top at 0.7210.
If new 2020 highs are made, the 76.4% Fibo of the 2018-2020 drop from 0.8136 to 0.5551 at 0.7516 might offer some resistance.
PMIs, ISM and Federal Reserve Chairman Jerome Powell's Congressional testimony top the event risks on Tuesday.
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