Investing.com -- EUR/USD fell sharply on Wednesday, halting a three-day winning streak, as crude futures surged to fresh-yearly highs helping push the greenback off near eight-month lows.
The currency pair traded between 1.1291 and 1.1387, before settling at 1.1298, down 0.0060 or 0.54% on the session. With the sharp losses, the euro closed below 1.13 against the dollar for the first time in three sessions. During a volatile stretch of trading, the euro is virtually flat against the dollar over the last month.
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 greenback moved in lockstep with soaring oil prices on Wednesday, rising considerably in U.S. afternoon trading. U.S. crude futures pared earlier losses from Wednesday morning, after the U.S. Energy Information Administration (EIA) said U.S. commercial crude oil inventories increased by 2.1 million barrels for the week ending on April 15. As a result, WTI crude surged more than 3% to eclipse $44 a barrel.
It came one day after the American Petroleum Institute said U.S. crude stockpiles rose by 3.1 million barrels last week. Analysts expected the Energy Department to report a build of 2.4 million barrels. At the Cushing Oil Hub in Oklahoma, stockpiles fell by 248,000 barrels, defying expectations for a draw around 1 million barrels. Inventory levels at Cushing, the main delivery point for NYMEX oil, still remain close to full storage capacity.
At session-highs, both WTI and Brent crude futures reached their highest level since November.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.50% to an intraday high of 94.56, before settling near session-highs at 94.54. The index is still down more than 2% over the last two months.
Investors await Thursday's interest rate decision by the European Central Bank's Governing Council for further indications on the scope of the ECB's controversial Negative Interest Rate Policy (NIRP). The ECB is widely expected to hold rates steady, one month after implementing a plethora of easing measures. It is also unlikely that the Governing Council will begin offering "helicopter money," or cash payments to individual investors in its latest effort to bolster economic growth.
The ECB's latest monetary policy decision also comes ahead of next week's Federal Open Market Committee two-day April meeting. The FOMC is also expected to leave its benchmark Federal Funds Rate unchanged at a targeted range between 0.25 and 0.50%. In the weeks following the FOMC's last meeting in late-March, several hawkish members have appeared to have broken ranks with Fed chair Janet Yellen on the prospect of further rate hikes. A slew of policymakers including Kansas City Fed president Esther George, San Francisco Fed president John Williams and Boston Fed president Eric Rosengren have openly disagreed with the Fed chair, who has remained adamant that the Fed should proceed cautiously with further tightening.
Though the FOMC estimated in December that it could raise short-term rates as much as four times this year, the Fed lowered the projections last month amid weak global economic and financial conditions.
Yields on the U.S. 10-Year surged six basis points to 1.85%, while yields on the Germany 10-Year fell two basis points to 0.15%.