EUR/USD struggles for direction ahead of ECB policy, US GDP data

The EUR/USD pair trades lacklustre slightly below the round-level resistance of 1.0900 in the London session. The major currency pair is expected to remain on the tenterhooks ahead of multiple economic indicators.

S&P500 futures have posted some gains in the European session, portraying some recovery in the risk-appetite of the market participants. The US Dollar Index (DXY) struck in a tight range around 103.30 as investors await the United States Q4 Gross Domestic Product (GDP) data, which will be published at 13:30 GMT.

Investors have anticipated that the US economy expanded by 2.0%, slower than growth rate of 4.9% in the third quarter of 2023. This would be the lowest growth rate since 2Q2022. A slowdown in the growth rate would ease consumer inflation expectations and boost hopes of an interest rate-cut by the Federal Reserve (Fed) in March.

In addition to the US GDP data, market participants will focus on the core Personal Consumption Expenditure (PCE) price index data for December, which will be released on Friday.

On the Eurozone front, investors await the interest rate decision from the European Central Bank (ECB), which will be announced at 13:15 GMT. The ECB is expected to maintain the main refinancing operations rate unchanged at 4.5%. Last week, ECB President Christine Lagarde commented that the central bank could start reducing interest rates from late Summer. Lagarde warned that inflation is high from where the ECB wants.