EUR/USD clears daily losses, downside more likely

EUR/USD experienced a daily low of 1.0521 and recovered towards the 20-day SMA, around 1.0560. The Euro faced selling pressure after the ECB held rates steady, and Christine Lagarde acknowledged the Eurozone’s economic struggles.

The USD gained momentum on strong Q3 GDP data, but lower US yields limited the upwards momentum. The focus now shifts to PCE data from the US from September.

The European Central Bank announced that they will hold rates steady, maintaining interest rates on main refinancing operations and marginal lending and deposit facilities at 4.50%, 4.75%, and 4.00%, respectively.

Christine Lagarde acknowledged the Eurozone’s economy’s likely weakness for the rest of the year and the labor market’s weakness. The ECB will likely hold rates at these levels to combat inflation.

The US Gross Domestic Product Q3 preliminary estimate expanded at an annualized rate of 4.9%, beating the 4.2%, and the US DXY index rose to monthly highs. However, the decline in US Treasury yields limited the pair’s momentum.