EUR/USD remains under pressure above 1.0550 ahead of ECB rate decision, US GDP data

• EUR/USD faces some selling pressure amid the cautious mood, higher US Treasury yields.
• The US New Home Sales increased to 759,000 MoM in September, better than expected.
• European Central Bank (ECB) is likely to keep interest rates unchanged on Thursday.
• Investors will closely watch the ECB rate decision, ECB President Lagarde’s speech, and US Q3 growth numbers.

The EUR/USD pair resumes its downside path after retracing from the 1.0600 area during the early Asian session on Thursday. Markets turn cautious on the escalating tension in the Middle East ahead of the European Central Bank (ECB) interest rate decision on Thursday, with no change in rate expected. The major pair currently trades around 1.0567, gaining 0.01% on the day.

That being said higher US Treasury yields and risk-off mood boost the US Dollar (USD) broadly. The September’s New Home Sales in the US increased to 759,000 MoM, above the market consensus of 680,000.

Furthermore, the Middle East conflicts might cap the upside of the pair and boost safe-haven assets like the Greenback. Israel agreed to delay the invasion of Gaza. Prime Minister Benjamin Netanyahu said that a ground invasion is being prepared.

On the other hand, the Eurozone economic data suggested a negative outlook in the region, which exerts pressure on the Euro (EUR). On Tuesday, the preliminary Composite PMI for the eurozone fell to 46.5 in October from 47.2 in September. It was the sixth consecutive reading below 50, indicating an ongoing downturn. Meanwhile, the Manufacturing PMI dropped to 43.0 from 43.4 in the previous reading, and the Services PMI declined from 48.7 versus 47.8 prior.

European Central Bank policymaker Gabriel Makhlouf said on Tuesday that the central bank will monitor the unfolding crisis in the Middle East while mentioning that it was too early to assess the impact on economies.

Investors will keep an eye on the ECB monetary policy meeting later on Thursday, which is expected to keep interest rates unchanged. The markets anticipate that the ECB is unlikely to raise any rate in the near future. The attention will shift to ECB President Christine Lagarde's forward guidance following the meeting.

On the US docket, the first Q3 Gross Domestic Product estimate will be due on Thursday, which is expected to show a 4.2% expansion. Also, Initial Jobless Claims and Durable Goods Orders will be released. These figures could give a clear direction to the EUR/USD pair.