EUR/USD rises back above 1.0000, remains sideways

• US dollar losses momentum amid an improvement in risk sentiment.
• Wall Street turns green, US yields modestly off highs.
• EUR/USD continues to consolidate ahead of the FOMC meeting.

The EUR/USD rose after the beginning of the American session and recently climbed to 1.0017, before pulling back to the parity area. It is posting modest losses on Monday, as it continues to trade in a range.

The move higher in EUR/USD took place amid a small retreat of the US dollar as Wall Street indexes turned positive. US yields are off highs but still near multi-year highs ahead of the FOMC meeting on Wednesday.

The US central bank is expected to raise interest rates by 75basis points on Wednesday. The combination of an aggressive Fed and a cautious tone among investors regarding signs of a global economic slowdown supports the greenback. “The repricing of Fed tightening risks is likely to keep the dollar bid across the board near-term.  As we said during this most recent dollar correction lower, nothing has really changed fundamentally and the global backdrop continues to favor the dollar and U.S. assets in general”, explained analysts at Brown Brother Harriman.

Range prevails

The EUR/USD continues to trade around the parity level, as it had been the case since last Wednesday. A break above 1.0030 should strengthen the euro while on the flip side, the critical support is the 0.9950 area. A firm break under 0.9950 would expose the next support at 0.9910. The next support is 0.9870, the last defence to fresh multi-year lows.

Technical levels