Euro is near the 3 month and a half level and the dollar strengthens its gains

UNITED STATES (OBSERVATORY) –┬áThe euro fell on Tuesday towards a three-and-a-half-month low as weaker-than-expected economic data earlier in the week weighed on sentiment in the single currency area ahead of a Federal Reserve decision.

The euro has risen in the last two weeks thanks to a 3-year yield on US Treasuries and a renewed link between high interest rates and a strong currency.

While markets expect no change in interest rates at the end of the Federal Reserve meeting on Wednesday, analysts are monitoring any change in the language used.

The euro fell 0.2 percent to $ 1.2058, staying close to last week’s high of $ 1.2055, the lowest since mid-January.

The dollar was up 0.1 percent against a basket of major currencies to hit the US currency index at 91.964.

The markets are eyeing US nonfarm payrolls for April, which may signal signs of strength in the world’s largest economy.

The dollar rose 2 percent in April, its biggest monthly gain since November 2016, after Treasury yields exceeded the psychologically important 3 percent mark, hitting its highest level in four years last week.

The latest US currency gains came after the euro fell on Germany’s weak retail sales data for March.

The dollar rose slightly to 109.43 yen.

The dollar rose to a two-and-a-half-month high of 109.540 yen on Friday as US bond yields rose but lost momentum as yields slipped from a four-year high.