Investing.com -- EUR/USD rose considerably on Wednesday to halt a six-day losing streak, as the dollar retreated from two-week highs in a quiet, restrained day of trading ahead of the Bank of England's quarterly inflation report.
The currency pair traded between 1.1369 and 1.1446, before settling at 1.1425, up 0.0053 or 0.47% on the session. With the sharp gains, the euro closed above 1.14 against the dollar for the first time in three sessions. Previously, the euro closed lower against the greenback in six straight sessions, after surging above 1.16 last week for the first time since the August Flash Crash. Since the start of the year, the euro is up more than 4% against its American counterpart.
EUR/USD likely gained support at 1.0538, the low from December 3 and was met with resistance at 1.1713, the high from Aug. 24.
Bank of England governor Mark Carney is bracing for a challenging meeting on Thursday when the BOE releases its first quarterly inflation report since February. The BOE is largely expected to leave its benchmark interest rate steady at 0.5 this year, even as inflation remains sharply below its 2% target. Since the BOE's, last inflation report the sterling has depreciated, hourly earnings have been muted and second quarter GDP growth forecasts have been relatively soft at 0.5%.
The meeting also comes weeks before a controversial referendum next month on U.K's status in the European Union. Earlier, Bank of England chancellor George Osborne admitted that the Treasury has engaged in significant contingency planning in the case the referendum passes on June 23 to allow a British departure from the European Union. In the U.S., several monetary policymakers including San Francisco Fed president John Williams, Atlanta Fed president Dennis Lockhart and Dallas Fed president Rob Kaplan have indicated that the Brexit vote could affect the Fed's interest rate decision a week earlier, while St. Louis Fed president James Bullard has played down the global ramifications of the outcome of the referendum.
GBP/USD inched up 0.05% on Wednesday to 1.4449.
Elsewhere, European Central Bank Governing Council member Ewald Nowotny emphasized that it is incumbent on the bank not too wait until inflation is too high before reversing its current monetary policy. Appearing at a luncheon at Vienna's Economics University, Nowotny also noted that the ECB doesn't have the means to influence foreign exchange rates, despite approving a wide range of easing measures in recent months. Since the ECB lowered interest rates to a new record low and expanded the scope of its comprehensive Quantitative Easing program on March 10, the euro has jumped more than 3% against the dollar.
In the U.S., treasury yields fell sharply amid strong demand for 10-Year notes at a $23 billion auction on Wednesday, before recovering near the close. Yields fell to 1.71% at the auction, the lowest yield on 10-year U.S. Treasuries at a note sale since December, 2012.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.50% to an intraday low of 93.65 before settling at 93.80. The index halted a six-day winning streak.