• EUR/USD clings to modest daily gains heading into the American session.
• US stock index futures trade modestly lower on the day.
• Investors await the Federal Reserve's policy announcements and dot plot.

EUR/USD climbed to 1.0670 during the European trading hours and came within a touching distance of the multi-month high it set at 1.0674 on Tuesday. The pair, however, lost its bullish momentum and retreated to the 1.0650 area heading into the American session.

Focus shifts to FOMC meeting

Earlier in the day, the data from the Eurozone showed that Industrial Production in October contracted by 2% on a monthly basis. This reading came in worse than the market expectation for a decline of 1.5% but had little to no impact on the Euro's performance against its rivals.

Meanwhile, the negative shift witnessed in market sentiment with the US stock index futures erasing earlier gains seems to be helping the US Dollar limit its losses for the time being.

On Tuesday, the US Dollar Index dropped to its weakest level in nearly six months at 103.58 after the November Consumer Price Index (CPI) figures came in below market expectations. As of writing, the index was down only 0.1% on the day at 103.87.

In case Wall Street's main indexes push lower after the opening bell, the US Dollar could benefit from safe-haven flows. Nevertheless, market action is likely to remain subdued with investors refraining from making large bets while waiting for the outcome of the FOMC's December policy meeting.

The US Federal Reserve is widely expected to raise its policy rate by 50 basis points. Investors are likely to react to revisions to inflation and terminal rate projections in the Summary of Economic Projections, the so-called dot plot.

EUR/USD Technical Analysis