Investing.com -- EUR/USD rose modestly on a choppy, volatile day of trading, as investors awaited comments from top central bankers on both continents for further signs of potential divergence before the next round of interest rate decisions later this month.
The currency pair traded in a tight range between 1.1274 and 1.1332, before settling at 1.1313, up 0.0014 or 0.13% on the session. With the slight gains, the euro closed higher against the dollar for the third consecutive session and closed above 1.13 for the first time in five trading days. The euro is virtually flat against the dollar over the last month, down 0.05% against its American counterpart since March 18.
EUR/USD likely gained support at 1.0538, the low from December 3 and was met with resistance at 1.1496, the high from Oct. 15.
The dollar pared earlier gains on Monday after oil unexpectedly staged a dramatic rally in the aftermath of an unproductive meeting among 18 major oil producers over the weekend in Qatar. A summit between major OPEC and Non-OPEC producers, including Russia came to a sudden halt on Sunday afternoon when Saudi Arabia demanded that Iran join the group in capping output at January levels. Iranian officials refused to attend the meeting, failing to budge from their stance of ramping up production to four million barrels per day, as the Persian Gulf nation strives to return to pre-sanction levels from 2007. The failure of major producers to achieve any progress in curbing a record glut of oversupply revives industry fears that oil prices will remain persistently low in the near-term future.
Crude futures, however, pared the losses shortly thereafter following reports that Kuwait output hovered around 1 million barrels per day, as producers took roughly 1.5 million barrels offline in response to a strike of thousands of workers over the weekend. While officials from the Kuwait National Petroleum Co. (KNPC) told the Al-Arabiya television network in Dubai that production lingered around 1.1 million bpd on the first day of strike, they expect it to return to average levels before the end of the week. Prior to the strike, Kuwait production remained around 2.8 million bpd, according to Reuters data.
Currency traders await remarks from European Central Bank president Mario Draghi on Wednesday in Frankfurt for further hints on potential easing measures that could be implemented by the Governing Council in an effort to stave off deflation throughout the euro zone. Draghi's speech will take place ahead of the ECB's latest interest rate decision on Thursday afternoon. Last month, the Governing Council lowered its deposit rate deeper into negative territory to Minus-0.4%, while expanding its comprehensive asset purchasing program to EUR 80 billion per month.
On Monday evening, Federal Reserve chair Janet Yellen is scheduled to make an appearance at a meeting of the Financial Stability Oversight Council in Washington. The dollar is up roughly 1% since Yellen sent strong indications in late-March that the Federal Open Market Committee (FOMC) will remain cautious with the timing of further interest rate hikes for the remainder of the year. The FOMC has left its benchmark Federal Funds Rate at a targeted range between 0.25 and 0.50% at each of its first two meetings this year. Although the Fed is not expected to raise short-term interest rates at their two-day meeting next week, the U.S. central bank could approve a 25 basis point hike at a subsequent meeting in June.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six major currencies, lost more than 0.20% to close near session-lows at 94.45. With the losses, the index retreated back to near eight-month lows.
Separately, USD/CAD fell 0.27% to 1.278 and USD/RUB lost 0.53% to 66.208, as the Ruble and Canadian Dollar received a boost from the rebound in oil prices.