EUR traded mixed against its major counterparts in the European session on Wednesday. The single European currency rose against safe-haven USD, CHF and JPY, but fell against GBP and commodity-linked AUD, CAD and NZD, as improving sentiment boosted demand for riskier currencies, which are expected to benefit from the economic recovery.

The latest lift in sentiment was driven by the U.S. Federal Reserve Chair Jerome Powell's pledge to continue loose monetary policy and better-than-expected Germany's Q4 GDP data.

Speaking to the Senate Banking Committee in Washington on Tuesday, the Fed's Chair Powell reiterated that interest rates would remain ultra-low despite indications of accelerating inflation, easing investors' concerns of a near-term change in monetary policy.

The Federal Statistics Office (Destatis) announced on Wednesday that Germany's economy grew by 0.3 percent q/q in the fourth quarter of 2020 instead of +0.1 percent q/q estimated previously, helped by strong exports and solid construction activity. On y/y basis, Germany's economy shrank 3.7 percent in the fourth quarter of 2020, less than the initially estimated drop of 3.9 percent. The Office also revised upward its 2020 full-year GDP reading for Europe's largest economy to -4.9% from -5.0% in an earlier estimate.