Investing.com -- EUR/USD rose moderately on Wednesday, in quiet, range-bound trade, as investors await a host of key economic data at week's end for further signs of potential divergence between the Federal Reserve and the European Central Bank.
The currency pair traded between 1.1129 and 1.1167, before settling at 1.1157, up 0.0022 or 0.14% for the session. With the slight gains, the euro halted a two-day losing streak against the dollar. More broadly, the euro has only recorded five winning sessions against its American counterpart for the entire month. Since hitting nine-month highs in early-May, EUR/USD has fallen considerably by nearly 3%.
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-dollar trade was devoid of any major fluctuations on Wednesday, as currency traders remained cautious ahead of a closely-watched speech by Fed chair Janet Yellen and the release of significant economic indicators at week's end. When the U.S. Census Bureau reports its second estimate for first quarter GDP on Friday morning, analysts expect to see a 0.4% increase from initial forecasts, amid possible upward revisions in consumption expenditures and business fixed investment. Analysts also anticipate that the GDP Price Index will remain steady at 0.7%. In addition, the University of Michigan is expected to report a slight decline in consumer sentiment to 95.5, after the flash reading surged by almost 7 points to 95.8, its strongest level in more than a year.
Market participants also await comments from Yellen on Friday afternoon at Harvard University for further indications on the timing of the Federal Open Market Committee's (FOMC) first interest rate hike in 2016. The dollar has gained strength, while gold has fallen precipitously since the minutes from the Fed's April meeting last week showed that the U.S. central bank could support a rate hike next month if the incoming data continues to show broad improvements in the economy. In two rare public appearances this spring, Yellen has largely maintained a dovish stance that the Fed will raise rates gradually in the current cycle, amid widespread global financial risks and persistently low inflation.
Meanwhile, Dallas Fed president Rob Kaplan indicated on Wednesday that he could support two rate hikes from the FOMC this year, as the labor market moves toward full employment. Addressing reporters at a speech in Houston, Kaplan also noted that the U.K.'s referendum on whether to leave the European Union on June 23 could factor in on the Fed's decision a week earlier.
"If economic data keeps going the way it is, I've said I will advocate for an increase in the near future," Kaplan said. "That may not be June or July; my approach is take one meeting at a time."
The CME Group's (NASDAQ:CME) Fed Watch tool indicated on Wednesday that there is a 31.9% chance the FOMC will raise rates in June, near the high end of estimates from earlier this week. Some analysts appear concerned that the FOMC could delay a potential rate hike until after the Brexit vote.
When the FOMC meets again in July, there is now a 45.7% that the committee will raise rates, up from 15.0% last month. In the euro area, ECB chief economist Peter Praet said in an interview with Publico that the central bank still has the tools at its disposal to lower rates deeper into negative territory, amid a so-called "erosion of trust" in globalization. The ECB's Governing Council will convene for its next monetary policy meeting late next week.
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 95.36 before closing at 95.40. The index is down by more than 4% since early-December.