Investing.com -- The U.S. dollar fell against the euro for the second straight day, as disappointing housing data slowed the currency's push toward parity before Wednesday's critical Federal Open Market Committee meeting.
EUR/USD inched up 0.0021 or 0.20% to 1.0591 in U.S. afternoon trading. The pair dipped below 1.057 in overnight trading before rising to a daily-high of 1.0650 several hours later. EUR/USD likely gained support at 1.05, its 12-year low from last week, while receiving resistance at $1.14, the one-month high from Feb. 17.
The Federal Reserve could remove a reference to remaining patient from its minutes when the Federal Open Market Committee begins a two-day meeting on Wednesday. The removal usually provides an indication that the U.S. central bank is ready to raise interest rates at some point this year. Typically, when the Fed eliminates such language it signals that an interest rate hike will occur at either of its next two meetings. Following this week's meeting, the FOMC will convene in June as well as September.
Efforts by the Fed to tighten monetary policy can cause the dollar to strengthen against other major currencies. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell slightly by 0.07% to 99.97. Last week, the index reached a 12-year high while eclipsing the 100 level.
The dollar's rally was also slowed by worse than expected housing data on Tuesday.
Last month, housing starts, according to the U.S. Commerce Department, fell by 17% to a seasonally adjusted pace of 897,000 units to reach the lowest level since January, 2014. Horrid weather throughout the Northeast for the month of February is thought to be responsible for the downturn. Housing permits have been above an adjusted pace of 1 million since July.
In Germany, meanwhile, the ZEW Current Conditions Index rose to 55.1 to reach an eight month high. The German Economic Sentiment Index also moved up to 54.8, its highest level in 13 months.
Elsewhere, Greece prime minister Alexis Tsipras reportedly requested a meeting with top officials including Germany chancellor Angela Merkel, France president Francois Hollande and European Central Bank head Mario Draghi at an EU summit later this week in Brussels.