EUR/USD holds gains above 1.0400 ahead of GDP data release | 30 January 2025

An event to watch out for today:

15:15 EET. EUR - ECB Interest Rate Decision

15:30 EET. USD - Quarterly GDP Change

EURUSD:

EUR/USD is rising after three consecutive losses, trading near 1.0420 during Asian hours on Thursday. The rise is due to a technical pullback in the US dollar (USD). Meanwhile, the US Dollar Index (DXY), which measures the dollar's exchange rate against six major currencies, is just below the 108.00 mark at the time of writing.

However, the pair's gains may be limited as the dollar may strengthen again following the Federal Reserve's (Fed) cautious stance on monetary policy. The Fed reinforced its hawkish outlook by removing language that signaled confidence in inflation reaching its 2% target.

During the press conference, Fed Chairman Jerome Powell reiterated that the central bank would require “real progress on inflation or some weakness in the labor market” before considering any policy adjustments. As expected, the Fed kept the overnight lending rate unchanged at 4.25 percent to 4.50 percent at its January meeting on Wednesday. The decision followed three consecutive rate cuts since September 2024, totaling one percentage point.

Meanwhile, the euro faces headwinds as the European Central Bank (ECB) is expected to cut rates by 25 basis points at its monetary policy meeting on Thursday, bringing the deposit rate down to 2.75%. Market participants expect further ECB rate cuts in the coming months, which could put pressure on the Euro.

Trading recommendation: Watch the level of 1.0400, if consolidated below consider Sell positions, if rebounded consider Buy positions.

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