Investing.com -- EUR/USD bounced off one-week lows on Monday, as dollar sentiment remained weak ahead of a highly-anticipated interest rate decision from the Federal Reserve, when the U.S. central bank is widely expected to leave short-term rates unchanged.
The currency pair traded between 1.1232 and 1.1303 before settling at 1.1292, up 0.0053 or 0.46% on the session. With the considerable gains, the euro ended a three-day losing streak against the dollar. Over the last month, the euro has been relatively flat against its American counterpart, down 0.75% during the period. More broadly, EUR/USD is up 4% since starting the year at 1.086.
EUR/USD likely gained support at 1.1055, the low from March 15 and was met with resistance at 1.1616, the high from May 3.
Investors continued to prepare for the likelihood that the Federal Open Market Committee will hold interest rates steady when the FOMC completes a two-day meeting on Wednesday afternoon. Still, Fed chair Janet Yellen could provide key clues on whether a July rate hike will remain on the table if she schedules a press conference for next month's meeting. Currently, Yellen only has sessions scheduled with the media following each of the FOMC's quarterly meeting when the Committee also releases long-term economic projections for its GDP, inflation and Federal Funds Rate outlook. Typically, the FOMC has refrained from adjusting interest rates without calling a press conference immediately following a monetary policy meeting.
The chances of a July rate hike, according to the CME Group's (NASDAQ:CME) FedWatch tool, stood at 17.9% on Monday, down from 43.2% a month earlier. The market also sees practically no chance of a rate hike during this week's meeting. The current probability of a June rate hike remained at 1.9% in Monday's session, sharply below last month's estimate of 26.3%.
The FOMC has left the target range on its benchmark Federal Funds Rate at its current level between 0.25 and 0.50% in each of its first three meetings this year. Any rate hikes by the Fed this year are viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.25% to an intraday low of 94.30, before rallying to 94.42 at the end of U.S. afternoon trading. The index is down by more than 5% since early-December.
Elsewhere, foreign exchange traders continued to keep a close eye on Brexit polls in the U.K. after a YouGov poll showed that the "Leave," campaign overtook the "Stay" campaign in the latest survey, reversing a narrow lead from a poll last week. A separate poll from The Guardian showed that the Leave vote took a six-point lead over respondents in favor of staying in the European Union, excluding voters who are still undecided. Separately, The Guardian's poll found that approximately one-third of voters will not decide on their vote until a week before the June 23 referendum.
It came after another survey released last Friday by research firm ORB found that 55% of British voters support leaving the EU, while 45% are in favor of staying in the European bloc. A slew of major world leaders including U.K. prime minister David Cameron, Germany chancellor Angela Merkel and International Monetary Fund managing director Christine Lagarde have issued stark warnings on the ramifications a British departure from the EU could have on the global economy at large.
GBP/USD fell to near two-month lows at 1.4116, before rebounding to to 1.4221, up 0.22% on the session.