Ella 
Bearish flows weighed on EUR/USD further after the European Central Bank (ECB) kept interest rates steady and US fourth-quarter gross domestic product (GDP) grew faster than expected.
The European Central Bank kept interest rates stable for the third consecutive meeting, but ECB President Christine Lagarde’s dovish bias in the monetary policy statement increased market bets on the European Central Bank to cut interest rates faster and more deeply in the middle of the year.
ECB press conference: Lagarde explains decision to keep interest rates steady and speaks on policy outlook
Money markets are currently betting that the ECB will initiate a 50 basis point rate cut by June, with interest rate swaps pricing in a total of 140 basis points of rate cuts by the end of 2024, compared with expectations of 130 basis points before the ECB rate decision. .
As of the fourth quarter, U.S. gross domestic product grew at an annual rate of 3.3%, higher than the median market forecast of 2.0%, but down from 4.9% in the previous quarter. U.S. stocks rebounded and the dollar index climbed.
The U.S. PCE price index will be released during the U.S. market session this trading week. As the Federal Reserve’s (Fed) preferred indicator for tracking inflation, the market will pay close attention to Friday’s U.S. PCE price index. The monthly rate of the U.S. PCE price index is expected to be 0.2% in December, compared with 0.1% last month. The annual rate of the PCE price index will drop from 3.2% to 3.0%.
