The euro defended its previously earned gains as investors ’focus now shifted to the European Central Bank (ECB) policy meeting to be held in the New York session.
The ECB faces major challenges in setting its monetary policy as the ongoing Ukraine-Russia war has posed risks to the country’s economic growth amid a recovery from Covid-19.
The economic sanctions imposed on Russia also have a major impact on Europe, especially since it has a high dependence on oil and gas imports from the country.
Not only that, the ECB is also facing pressure from the already unstoppable European inflation surge by rising to 5.8% last month.
Investors will scrutinize a statement from ECB President Christine Lagarde on the current situation and expectations for policy -making on whether the central bank will end the bond -buying program in March or extend it even further.
In the European session, the euro remained stable around 1.100 against the greenback dollar after recording its biggest daily gain in 6 years on Wednesday.
Meanwhile, investors are also waiting for US inflation data which is expected to show an improvement in February and further strengthen confidence for the Federal Reserve (Fed) to raise its interest rates at the FOMC meeting next week.
Against a basket of major currencies, the dollar index that measures the strength of the greenback dollar traded little changed at 98.10.
