EUR / USD rises to two-week highs above 1.1850 due to widespread USD weakness

• EUR / USD remains on track to close for the second day in a row higher.
• The US dollar index turned south at the beginning of the US session.
• The 10-year US Treasury yield is shedding more than 2% on Tuesday.

The pair EUR/USD it closed the first day of the week in positive territory and remained relatively quiet around 1.1800 during the first half of the day on Tuesday. However, with the dollar under heavy downward pressure during US trading hours, the pair gained traction and hit its highest level in two weeks at 1.1861. At time of writing, the EUR / USD was up 0.4% on the day at 1.1859.

After spending much of the day to the upside, the US Dollar Index (DXY) turned south and hit its lowest level since March 24 at 92.37.

In the absence of major macroeconomic data releases, US Treasury yields continued to affect the USD’s performance against its rivals. The benchmark 10-year US Treasury yield is down 2.6% on the day at 1,661% and the DXY is down 0.15% to 92.43.

EU data showed that Sentix investor sentiment improved sharply to 13.1 in April from March 5 and beat the market expectation of 7.5 by a wide margin, helping the shared currency to remain resilient against its pairs.

On Wednesday, IHS Markit will release services PMI data for the euro area and Germany. Later in the day, the FOMC will release the minutes of its March meeting.

EUR / USD short-term outlook

UOB Group analysts believe that EUR / USD is likely to struggle to rise above 1.1870.

“The current move is seen as the first stages of a corrective rebound. In view of the incipient buildup of momentum, any EUR strength is likely to be capped at 1.1870 for now,” analysts noted. “Overall, the euro is expected to trade on a positive bias as long as it doesn’t move below 1.1745 in these few days.”

Technical levels