Investing.com -- EUR/USD continued to retreat from three-week highs from last Thursday, as market players awaited three major central banking meetings later this week.
The currency pair traded between 1.1078 and 1.1153 in Monday's session, before settling at 1.1103, down 0.0062 and 0.45% on the day. Last Thursday, the euro surged more than 1.6% against the dollar after the European Central Bank approved a wide range of stimulus measures aimed at bolstering economic growth throughout the euro zone. The euro has closed above 1.11 against its American counterpart in each of the last three sessions.
EUR/USD likely gained support at 1.0709, the low from January 5 and was met with resistance at 1.1378, the high from Feb. 11.
On Tuesday, the Bank of Japan is widely expected to leave interest rates unchanged several weeks after the Japanese central bank roiled global markets by unexpectedly adopting a negative interest rate policy for the first time in history. At the January meeting, the BOJ lowered lowered the rate it charges to commercial banks that park excess reserves at the central bank to negative 0.1% in a move aimed at helping its economy stave off threats of deflation. The BOJ is ostensibly hoping to keep the yield curve as low as possible in order to assist the government with financing issues by making public sector debt more affordable.
A day later, the Federal Reserve will issue its latest monetary policy statement following the completion of its two-day Federal Open Market Committee (FOMC) for the month of March. While the Fed is also expected to leave short-term interest rates steady, the U.S. central bank could provide further clues on its pace of future rate hikes in its first tightening cycle in a decade. The FOMC held its benchmark Federal Funds Rate at a target range between 0.25 and 0.50% in January, one month after abandoning a seven-year zero interest rate policy.
The U.S. economy has shown signs of improvement since the FOMC's last meeting. In February, non-farm payrolls surged by 242,000, considerably above consensus estimates of gains of 190,000. A month earlier, the Core PCE Index, the Fed's preferred gauge on inflation, soared by 1.7% on an annual basis, its strongest annual gain in more than a year. Economists, however, remain concerned by sluggish wage gains after average hourly earnings fell by 0.1% last month.
The CME Group's (NASDAQ:CME) Fed Watch reported on Monday that there is a 96.1% chance the FOMC will leave rates unchanged at the March meeting. By comparison, the CME Group said a month ago there was an 81.5% probability that the FOMC would hold rates steady.
On Thursday, the Bank of England will end a week of central bank meetings with its latest interest rate decision.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.35% to an intraday high of 96.74 before closing at 96.60 . The index still remains near one-month lows from late last week.
Yields on the U.S. 10-Year fell two basis points to 1.96%, while yields on the Germany 10-Year added one basis point to 0.28%.