The euro is having a firm start to Thursday’s European session with the dollar on the back foot after China’s reiteration to stimulate economic growth boosted risk sentiment. Flows exited the safe-haven dollar helping the EUR gain further traction.
In addition the European Central Bank (ECB)’s de Guindos maintained the hawkish narrative stating that “50bps may soon become the new standard” to quell rising inflationary pressures within the eurozone.
Thin liquidity over the festive period may add to bigger moves should economic data significantly beat estimates. Later today, U.S. GDP will be in focus and is expected to improve for the third consecutive release exposing downside risk for the pair.
From a bearish perspective, another important metric will come via the core PCE print and with inflation at the top of the Fed’s agenda, another move lower could bring doves back into the picture.