• EUR/USD attracts sellers for the second successive day amid a bullish USD.
• Bets for smaller Fed rate cuts and geopolitical risks underpin the Greenback.
• Bears might refrain from placing fresh bets ahead of the ECB on Thursday. 

The EUR/USD pair drifts lower for the second straight day on Tuesday and drops to the 1.0890 area in the last hour, back closer to its lowest level since August 8 touched the previous day. Bearish traders, however, need to wait for a break below the 200-day Simple Moving Average (SMA) before placing fresh bets ahead of the key central bank event risk.

The European Central Bank (ECB) is scheduled to announce its policy decision on Thursday and is expected to cut interest rates again for the third time this easing cycle amid mounting concerns over sluggish growth. Furthermore, inflation in the Eurozone fell below the ECB's 2% target for the first time since 2021 and backs the case for further policy easing. This, in turn, undermines the shared currency, which, along with a bullish US Dollar (USD), turns out to be a key factor weighing on the EUR/USD pair. 

The USD Index (DXY), which tracks the Greenback against a basket of currencies, stands tall near a two-month top amid firming expectations for a less aggressive policy easing by the Federal Reserve (Fed). In fact, the markets have now fully priced out the possibility of another oversized Fed rate cut in November, which keeps the US Treasury bond yields elevated. Moreover, geopolitical risks benefit the safe-haven buck and support prospects for a further depreciating move for the EUR/USD pair.