Forex Today: Euro rally pauses ahead of ECB, hawkish BoJ commentary lifts JPY

Here is what you need to know on Thursday, March 7:

The European Central Bank (ECB) will announce monetary policy decisions and publish the revised macroeconomic projections on Thursday. The US economic docket will feature weekly Initial Jobless Claims, Q4 Unit Labor Costs and January Trade Balance data. Later in the American session, Federal Reserve Chairman Jerome Powell will testify before the Senate Banking Committee.

ECB Preview: Forecasts from 10 major banks, not on the verge of cutting yet, June moving into focus.

The US Dollar (USD) came under selling pressure during Fed Chairman Powell's testimony before the House Financial Services Committee. Powell said that incoming data will determine when they will start reducing the policy rate. Commenting on the economic outlook, Powell noted that there was no reason to think the economy was in or facing a significant near-term risk of recession. The USD Index fell 0.4% on Wednesday and registered losses for the fourth consecutive day. At the time of press, the index was trading modestly lower on the day at around 103.20. Meanwhile, the benchmark 10-year US Treasury bond yield holds steady near 4.1% after losing more than 1% on Wednesday. 

EUR/USD gathered bullish momentum and reached its highest level since late January above 1.0900 on Wednesday. The ECB is widely expected to leave key rates unchanged following the March policy meeting. ECB President Christine Lagarde comments on the policy outlook and respond to questions in a press conference starting at 13:45 GMT.

EUR/USD holds steady near 1.0900 ahead of ECB interest rate decision.

Bank of Japan (BoJ) policy board member Junko Nakagawa said early Thursday that prospects of sustainably achieving the 2% inflation were gradually heightening and argued that they didn't necessarily need to wait for all small, mid-sized firms' wage talks outcome in deciding when to end negative rates. Additionally, BoJ Governor Kazuo Ueda noted that it was “fully possible to seek exit from stimulus while striving to achieve 2% inflation target.” USD/JPY declined sharply during during the Asian trading hours on Thursday and was last seen trading slightly above 148.00, where it was down nearly 1% on a daily basis.

Japanese Yen clings to strong intraday gains near multi-week top against USD.

The data from China showed early Thursday that the trade surplus widened to $125.16 billion in January-February period from $75.34 billion. After rising 0.9% on Wednesday, AUD/USD continued to edge higher early Thursday and was last seen trading near 0.6600.

Australian Dollar extends gains after upbeat Chinese Trade data.

GBP/USD struggles to gather bullish momentum during the European trading hours on Wednesday as investors assessed the details of the Sprint Budget. Later in the day, the broad-based USD weakness helped the pair push higher. Early Thursday, GBP/USD consolidates its weekly gains slightly below 1.2750.

UK's Hunt: Will extend energy windfall tax by 1 year.

Gold extended its rally as US Treasury bond yields edged lower and touched a new all-time high of $2,161 early Thursday. XAU/USD stages a technical correction and holds steady at around $2.155 in the European morning.

Gold price prolongs its strong uptrend, hits fresh record high on rate cut bets.