Dollar Strength Ahead of Fed Meeting Pins EUR/USD at Monthly Low

The EUR/USD pair has been consolidating near its monthly low of 1.1362, as traders wait for the outcome of the Federal Reserve's two-day meeting that concludes on Wednesday afternoon. The pair has been stuck in a grind lower, down 0.49% over the past 30 days and 1.60% over the past year.

The dollar side of the pair is doing all the work, with the Dollar Index sitting at 101.5250, up 2.67% over the past 12 months. This strength is driven by traders buying dollars ahead of the Fed's decision on the possibility of a hawkish outcome, which has increased market-implied odds of a July rate increase to around 36%.

However, the energy channel makes this more delicate, as the premium built into the price has collapsed with Brent falling 3.71% to $85.08 and West Texas Intermediate at $80.11. The dollar's resilience in holding its bid is notable, despite the input that drove the repricing reversing.

The September question remains where the actual trade sits, with implied odds of a September increase ranging from 56% to roughly 80%, depending on the pricing source and day. The meeting is genuinely live, as the data cuts both ways, with June consumer prices decelerating from 4.2% to 3.5%, but the labour market showing just 57,000 payrolls.