The U.S. dollar gained for the second day versus a basket of major currencies ahead of the awaited Fed meeting. Also, the yen advanced against majors including the dollar after the drop in Asian and European shares which were affected by the downbeat trade data from the China.

The dollar index, which tracks the dollar movements vis-à-vis a basket of major currencies, bounced to 81.06 from the day's opening at 80.72, poising for the first weekly advance after dropping for six consecutive weeks.

Many traders preferred to close positions on higher-yielding currencies till Bernanke's announcements later on toda. Analysts expect the continuation in bond purchase along with keeping borrowing cost near zero after the slowdown in U.S. growth witnessed in the second quarter.

Concerning the euro-dollar pair, it fell for the second day to 1.3157 after hitting a low of 1.3133, but it may find strong support at 1.3113 levels, while it recorded a high of 1.3233. For the rest of the day, the pair is expected to move between support and resistance at 1.3115 and 1.3180 respectively.

In the absence of economic data today from the euro zone and ahead of the release of the awaited second-quarter GDP data due later in the week, the euro is doing downside correction after touching three-month high against the dollar, yet it may continue its rise if the third-quarter data came as strong as the second quarter.

Turning to the sterling-dollar pair, it is showing sharp decline on the daily and 4- hour basis. The pair stopped its rally after approaching physiological levelat 1.6000 last week, above five-month high against the green currency.

The Sterling did not get support from the optimistic trade report which showed that UK visible trade deficit narrowed to 7401 billion pounds in June compared with the revised deficit of 8028 billion pounds. Another report, however,released today revealed that house prices dropped in July. Yet, the main highlight this week will be on tomorrow's BoE quarterly inflation report where new growth and inflation projections will be announced.

Currently, the pair is trading at 1.5752 after recording a high of 1.5904 and a low of 1.5735, while it is expected to move between support at 1.5700 and resistance at 1.5865 for the rest of the day.

With regard to the dollar-yen pair, it is showing slight decline on the daily charts as the decline in stocks and China's exports rose only 38.1% from 43.9% which enhanced demand on the yen as a refuge. In Japan, the BoJ kept interest rate unchanged as expected, thus the decision did not affect the yen movement.

So far, the pair is trading at 85.90, reporting a high of 86.05 and a low of 85.61, whereas support is seen at 85.30 while resistance is at 86.55.