• After recent increases, the EUR/USD pair holds at a psychological level on Thursday.
• It is anticipated that the ECB will keep the Rate on Deposit Facility at 4.0%.
• Fed Chair Powell has stated that at some time this year, interest rates will be lowered.

During the Asian session on Thursday, the EUR/USD pair stayed stable at 1.0900, retracing somewhat from its six-week high of 1.0915, which was hit in the previous session after Federal Reserve (Fed) Chair Jerome Powell made dovish statements during his appearance before the House Financial Services Committee. Later in the day, the European Central Bank (ECB) is expected to make its Monetary Policy Decision public.

The ECB is expected to keep the Rate on the Deposit Facility at 4.0% for the fourth meeting in a row. In conjunction with this decision, the ECB will release updated economic predictions. The comments made by ECB President Christine Lagarde at the press conference following the meeting will be carefully watched for clues about the central bank’s monetary policy stance and economic forecast.

Furthermore, the Eurozone Retail Sales data, which were less dismal than expected on Wednesday, may have provided some support for the Euro. According to a January study from Eurostat, the retail sector in the Eurozone is still declining by 1% annually, which is less than the 1.3% decline that was predicted. This comes after a December decline of 0.5%. In contrast to the preceding decline of 0.6%, month-over-month retail sales showed a minor recovery, rising 0.1% as anticipated.

Federal Reserve Chair Powell stated in the semi-annual Monetary Policy Report that the US central bank is prepared to lower borrowing costs “at some point this year.” However, the current intensification of the regional financial crisis in the US might accelerate this timescale. Investors are looking forward to Fed Chair Jerome Powell’s further comments on Thursday.

There was a decline in the US Dollar Index (DXY), which was mostly caused by lower US Treasury rates. A further factor contributing to the US Dollar’s (USD) decline was worse employment statistics from the US. The US ADP Employment Change for February was announced at 140K, which was an improvement over the previous 111K but somewhat below the expected 150K. Furthermore, the US JOLTS Job Openings for January fell short of the market estimate of 8.900M, coming in at 8.863M instead of December’s 9.026M. Next on the agenda is Friday’s release of the Nonfarm Payrolls (NFP) labor report.