EUR/USD revisits lows in the 1.1850 zone on USD gains

• EUR/USD debilitates further to the mid-1.1800s on Tuesday.
• The dollar’s recovery mimics the rebound in US yields.
• Economic Sentiment in Germany, EMU disappoints in September.

Sellers keep dictating the rules around the European currency in the first half of the week and now force EUR/USD to slip back to the mid-1.1800s, or 3-day lows.

EUR/USD looks offered ahead of the ECB

EUR/USD probes the lower end of the daily lows near 1.1850 on the back of the resumption of the buying interest in the dollar, which appears largely backed by the moderate rebound in US yields.

Indeed, yields of notes maturing in 10-years’ time challenge 4-week peaks above 1.37%, some 10bps higher than pre-Payrolls figures and up for the third consecutive week so far.

Moving forward, the single currency could well be walking a downward path in the next sessions, as speculations that Chairwoman Lagarde could talk down any chatter around tapering the ECB’s asset-purchase programme at its event on Thursday remain well on the rise despite some Governing Council members were advocating for an anticipated move on the stimulus package in past days.

Earlier in the euro calendar, the Economic Sentiment in both Germany and the euro area receded to 26.5 and 31.1, respectively, for the month of September. Both prints also came in short of expectations.

EUR/USD levels to watch

So far, spot is losing 0.13% at 1.1852 and a break below 1.1813 (55-day SMA) would target 1.1663 (2021 low Aug.20) en route to 1.1612 (monthly low Oct.20 2020). On the flip side, the next hurdle lines up at 1.1909 (monthly high Sep.3) followed by 1.1948 (100-day SMA) and finally 1.2000 (psychological mark, 200-day SMA).