LONDON—The euro held close to a five-year low against the U.S. dollar on Tuesday with the Federal Reserve expected to hike rates this week, while traders wait for European Central Bank President Christine Lagarde to give clues on her monetary policy plans.
The Fed has taken an increasingly aggressive approach to monetary policy as inflation rose at its fastest pace in 40 years, while the ECB has been more cautious.
The U.S. central bank is seen raising interest rates by 50 basis points and announce plans to reduce its $9 trillion balance sheet when it concludes its two-day meeting on Wednesday.
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