Ella 
In early Asian trading on Thursday, the EUR/USD pair resumed its downward trend after retreating from the 1.0600 area. Before the European Central Bank announced its interest rate decision on Thursday, the market turned cautious about the escalation of tensions in the Middle East, and the European Central Bank was expected to remain on hold. EUR/USD is currently trading around 1.0567, with an intraday increase of 0.01%.
Still, rising U.S. Treasury yields and risk aversion broadly boosted the U.S. dollar (USD). The seasonally adjusted annualized total of new home sales in the United States increased to 759,000 units in September, higher than the expected 680,000 units.
In addition, conflict in the Middle East may limit the upside for EUR/USD and boost safe-haven assets such as the US dollar. Israel agrees to postpone invasion of Gaza. Prime Minister Benjamin Netanyahu said preparations were underway for a ground invasion.
On the other hand, Eurozone economic data points to a less optimistic outlook for the Eurozone, which puts pressure on the Euro (EUR). On Tuesday, the euro zone’s flash composite purchasing managers’ index fell to 46.5 in October from 47.2 in September. It was the sixth consecutive reading below 50, indicating a continued economic downturn. Meanwhile, the manufacturing PMI fell to 43.0 from the previous reading of 43.4, and the services PMI fell to 47.8 from 48.7.
ECB policymaker Gabriel Makhlouf said on Tuesday that the central bank would pay attention to the crisis situation in the Middle East, adding that it was too early to assess the impact of the crisis on the economy.
Investors will be closely watching the European Central Bank’s monetary policy meeting later on Thursday, where it is expected to remain on hold. Markets expect the European Central Bank to be unlikely to raise interest rates in the near future. ECB President Christine Lagarde will issue forward-looking guidance after the meeting.
In the United States, the initial value of the annualized quarterly rate of real GDP in the third quarter of the United States will be announced on Thursday, with an expected value of 4.2%. In addition, the United States will also announce initial jobless claims and durable goods orders. These data will provide direction for the EUR/USD pair.
