EUR/USD tumbles from near 1.1900 to one-week lows under 1.1840

• US dollar reverses sharply amid higher US yields, DXY turns decisively higher.
• EUR/USD extends losses, eyes the 20-day SMA.

The EUR/USD reversed sharply amid a rally of the US dollar and fell from the highest level in three days to a one-week low in a few minutes. The pair peaked at 1.1899 after the beginning of the American session and was boosted by US data, and as of writing, it trades at 1.1833, the lowest level in a week.

Clarida + ISM service sector offset ADP

A weaker-than-expected reading of the ADP private employment report weakened the greenback across the board, sending EUR/USD toward 1.1900. When the pair was ready for a new break higher, two events favored the dollar: ISM service sector and Clarida’s comments.

The ISM service sector surpassed expectation in July, coming in at 64.1 (consensus: 60.4). At the same time, Fed Vice Chair Clarida said the economy could warrant interest rate hikes by early 2023. His comments triggered a sell-off in Treasuries and pushed yields to the upside.

The US 10-year yield rose from monthly lows at 1.12% to 1.21%. The DXY is now up by 0.25% on Wednesday, having the best day in weeks.

Technical levels