• EUR/USD extends the rally to around 1.1615 in Tuesday’s Asian session. 
• US manufacturing contracted for the ninth straight month in November, undermining the US Dollar. 
• Traders await the flash reading of the Eurozone HICP on Tuesday. 

The EUR/USD pair extends its upside to near 1.1615 during the Asian trading hours on Tuesday. The US Dollar (USD) weakens against the Euro (EUR) as weaker-than-expected US Manufacturing PMI data heaps pressure on the Federal Reserve (Fed) to cut interest rates later this month.  

Data released by the Institute for Supply Management (ISM) on Monday revealed that US manufacturing contracted for the ninth straight month in November, with the Manufacturing PMI declining to 48.2 in November from 48.7 in October. This figure came in worse than the estimation of 48.6. 

Following softer US economic data, Fed funds futures traders are now pricing in nearly an 87% chance of a reduction at the conclusion of the Fed’s December 9-10 meeting, up from 71% odds a week ago, according to the CME FedWatch Tool.

The shared currency receives support from the growing acceptance that the European Central Bank (ECB) is done cutting interest rates. ECB President Christine Lagarde said last week that borrowing costs are at the “right level.” Meanwhile, ECB Governing Council member Joachim Nagel noted that he’s comfortable with the monetary-policy settings.

The preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone will be closely watched later on Tuesday. The HICP is expected to show an increase of 2.1% YoY in November, while the core HICP is estimated to show a rise to 2.5% during the same period. Any signs of softer inflation in the Eurozone could weigh on the Euro against the Greenback in the near term. 

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