Investing.com -- EUR/USD inched down on Monday, remaining near one-month lows, as the dollar as a pair of Federal Reserve policymakers sent further indications that the U.S. central bank could approve multiple rate hikes before the end of this year.
The currency pair traded in a tight range between 1.1187 and 1.1243, before settling at 1.1219, down 0.002 or 0.02% for the session. The euro has closed lower against the dollar in five of the last six sessions. For the month of May as a whole, the euro has only recorded four winning sessions against its American counterpart. Since hitting nine-months in early-May, EUR/USD has fallen considerably by more than 2.5%.
EUR/USD likely gained support at 1.1055, the low from March 15 and was met with resistance at 1.1434, the high from May 12.
The euro appeared headed for sharp losses in overnight trading, after Federal Reserve Bank of St. Louis president James Bullard reiterated that the U.S. central bank has a plan in place to raise rates gradually if the economy improves as expected. Speaking at the Official Monetary and Financial Institutions Forum in Beijing, Bullard emphasized that he sees more factors in favor of a series of slow rate increases than no hikes at all, as the Federal Open Market Committee (FOMC) prepares for a critical interest rate decision in three weeks. Prior to the meeting, the U.S. Department of Labor will release its May national jobs report next week, providing the FOMC with key data on the pace of job growth nationwide. While nonfarm payrolls have increased exponentially and the unemployment rate has fallen steadily, the U.S. economy added only 160,000 jobs in May far below consensus estimates.
"Labor markets are relatively tight. This may put upward pressure on inflation going forward," said Bullard a voting member of the FOMC during the current cycle. "This is an important factor supporting the FOMC view on the expected path of the policy rate."
Several hours later, San Francisco Fed president John Williams said in an appearance in New York that he thinks it could be appropriate to raise interest rates two to three times this year, followed by another three to four times in 2017. The FOMC has left its benchmark Federal Funds Rate unchanged this year at a level between 0.25 and 0.50%. In December, the FOMC abandoned a seven-year zero interest rate policy by raising rates for the first time in nearly a decade. Later during a question and answer session, Williams admitted he is not sure whether the FOMC will raise rates in June.
The dollar, though, recoiled as the session wore on amid heavy short covering. At one point Monday, the dollar approached levels from the end of last week when it surged to near two-month highs.
Bullard kicked off a busy week of public appearances for FOMC members, ahead of the release of GDP and Consumer Sentiment data on Friday. Fed chair Janet Yellen will close the week with a speech at the Radcliffe Institute for Advanced Study at Harvard University.
In Europe, Markit's Euro Area Composite PMI index inched down 0.1 in the May flash reading to 52.9, slightly below consensus forecasts of 53.1. It came as the Services index stayed flat at 53.1, while Manufacturing declined by 0.2 to 51.5. Analysts expected to see a gain of 0.2 to 51.9.
Yields on the U.S. 10-Year were flat at 1.83%, while yields on the Germany 10-Year ticked up one basis point to 0.18%.