EUR/USD Forecast: Euro could test 1.0960 on a hawkish ECB surprise

• EUR/USD fluctuates near 1.0900 after failing to clear this level on Wednesday.
• ECB is widely expected to leave key rates unchanged.
• Investors will also pay close attention to US GDP data.

EUR/USD gathered bullish momentum and advanced to the 1.0930 area on Wednesday. With the US Dollar (USD) staging a rebound later in the day, the pair erased a large portion of its daily gains and returned below 1.0900. Investors await the European Central Bank’s (ECB) policy announcements and high-tier data releases from the US.

Although the Composite PMI from the Euro area showed that the business activity in the private sector continued to contract in early January, the Manufacturing PMI recovered unexpectedly and helped the Euro find demand. Moreover, the improving risk mood made it difficult for the USD to stay resilient against its rivals. Nevertheless, upbeat PMI readings from the US supported the USD and forced EUR/USD to turn south later in the American session.