Investing.com -- EUR/USD rose moderately erasing most of the losses from a session earlier, as currency traders await the European Central Bank's key meeting on Thursday in Malta.
The currency pair traded in a tight range between 1.1324 and 1.1386 on Tuesday before settling at 1.1348, up 0.19% on the session. Since Labor Day, EUR/USD has remained in a holding pattern between 1.10 and 1.16, while hardly experiencing any sharp fluctuations. In fact, over the last month of trading the currency pair has only moved more than 1% in a positive or negative direction once in 20 sessions after falling by 1.03% on September 21. During that span, the euro is up by roughly 0.40% against the dollar.
EUR/USD likely gained support at 1.1103, the low from Sept. 23 and was met with resistance at 1.1496, the high from Oct. 15.
For the second consecutive session, investors were hesitant to make any major moves ahead of the ECB's monetary policy meeting in Malta on Thursday. In September, inflation in the euro zone fell by 0.1% from its level a month earlier, marking the first time it dropped below zero since March.
During the same month, the ECB launched a long-term €60 billion a month quantitative easing program aimed at stimulating economic growth throughout the zone. Draghi also noted last month that the ECB could extend the quantitative easing beyond September, 2016, if needed. Many prominent economists in Europe do not expect the ECB to make any decisive changes to the program at the meeting. Any signal from Draghi that the ECB may need to increase the scope of the bond buying initiative could provide a tacit admission that the quantitative easing program has proven to be less successful than he initially anticipated.
While the launch of QE throughout the euro zone pushed EUR/USD down considerably at the start of the year, it has rallied in recent months as the Federal Reserve has continued to delay an inevitable interest rate hike. Policy accommodation from the Fed is viewed as bullish for the dollar, as foreign investors pile into the greenback in an effort to capitalize on higher yields. The pair has gained approximately 8.5% since mid-March when it fell below 1.05, amid speculation that a rate hike from the Fed could be imminent.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.20% to an intraday low of 94.62 on Tuesday, before paring some of the losses in afternoon trading. The index closed at 94.89, down 0.06%, halting a four-day winning streak.
Yields on the U.S. 10-Year rose by four basis points to 2.07%. Bond yields on U.S. 10-year treasuries have remained above 2% in each of the last four sessions.