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

• EUR/USD sticks to a psychological level on Thursday post recent gains.
• ECB is expected to maintain the Rate on Deposit Facility at 4.0%.
• Fed Chair Powell has indicated the readiness to reduce interest rates at some point this year.

EUR/USD remains steady around 1.0900 during the Asian session on Thursday, retracing slightly from its six-week high of 1.0915 reached in the prior session following dovish remarks by Federal Reserve (Fed) Chair Jerome Powell during his testimony before the House Financial Services Committee. The European Central Bank (ECB) is set to announce its Monetary Policy Decision later in the day.

The ECB is anticipated to maintain the Rate on Deposit Facility at 4.0%, marking the fourth consecutive meeting without a change. Alongside this decision, the ECB will release updated economic forecasts. ECB President Christine Lagarde's remarks during the post-meeting press conference will be closely scrutinized for insights into the central bank's monetary policy stance and economic outlook.

Moreover, the Euro possibly found some support from Eurozone Retail Sales figures released on Wednesday, which were less negative than anticipated. In January, Eurostat reported that the Eurozone retail sector continued to contract annually by 1%, remaining below the anticipated 1.3% decline. This follows a 0.5% decrease in December. However, there was a slight improvement in month-on-month Retail Sales, with a 0.1% rise as forecasted, compared to the previous contraction of 0.6%.

Federal Reserve Chair Powell has signaled the readiness of the US central bank to reduce borrowing costs "at some point this year," as indicated in the semi-annual Monetary Policy Report. However, the recent escalation of the regional banking crisis in the United States (US) may accelerate this timeline. Investors are eagerly awaiting additional insights from Fed Chair Jerome Powell on Thursday.

The US Dollar Index (DXY) faced a downturn, primarily influenced by reduced US Treasury yields. Weaker employment data from the United States (US) added to the downward pressure on the US Dollar (USD). February's US ADP Employment Change was reported at 140K, slightly below the anticipated 150K but an improvement from the previous 111K. Additionally, January's US JOLTS Job Openings declined to 8.863M from December's 9.026M, missing the market forecast of 8.900M. Friday's release of the Nonfarm Payrolls (NFP) labor report will be eyed next.