EUR/USD declines following ECB’s decision, Lagarde’s press conference

• EUR/USD dips 0.19%, in response to the ECB's decision to hold rates and cautious remarks from President Christine Lagarde.
• The US economy outperforms expectations with a 3.3% QoQ GDP growth in Q4 2023, surpassing forecasts but lower than the previous quarter.
• Key upcoming events include further comments from ECB President Lagarde and the release of the Eurozone's Consumer Confidence and US Core PCE Price Index data.

The EUR/USD extends its losses past the European Central Bank (ECB) monetary policy decision to keep the main deposit rate unchanged as the ECB’s President Christine Lagarde's press conference finished. That and solid US GDP figures kept the major down by 0.19%, trading at 1.0864 after hitting a high of 1.0901.

Lagarde’s comments and US economic data weighed on the Euro as the pair edges lower

Summarizing ECB’s President Christine Lagarde's comments at the press conference, she said that inflation is expected to ease further over 2024 while mentioning that growth risks are tilted to the downside. Lagarde added that inflation could fall more quickly if energy prices evolve, though geopolitical tensions in the Middle East pose upside risks to inflation. When asked about rate cuts, she added that the Governing Council agreed they need to be data-dependent

Across the pond, a busy docket in the US revealed the economy for the last quarter of 2023 rose by 3.3% QoQ, exceeding forecasts of 2% and lower than Q3’s 4.9%, according to the Gross Domestic Product (GDP) report revealed by the US Bureau of Economic Analysis (BEA). At the same time, Durable Goods Orders in December were unchanged, blamed on a slump in transportation equipment manufacturing.

On another date, the US Bureau of Labor Statistics revealed that Initial Jobless Claims for the week ending on January 20 increased by 214K, exceeding the previous week's reading and forecasts of 200K.

Ahead on the week. ECB’s President Lagarde will cross wires at around 16:15 GMT today. The Eurozone’s (EU) docket will feature Germany’s Gfk Consumer Confidence on Friday. On the US front, the Federal Reserve’s preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) Price Index, is expected to drop from 3.2% to 3% YoY. In comparison, general PCE is foreseen at 2.6%, unchanged from the last report.

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