- EUR/USD gathers strength to around 1.1830 in Wednesday’s early European session.
- Resolution of partial government shutdown and shifting expectations for Fed policy might support US Dollar and cap the pair’s upside.
- ECB is anticipated to hold rates steady at the first meeting of the year.
The EUR/USD pair trades on a firmer note near 1.1830 during the early European session on Wednesday. Nonetheless, the upside for the major pair might be limited as traders remain cautious after a partial government shutdown swiftly ended. Later on Wednesday, the preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone will be closely watched.
The BBC reported that US President Donald Trump signed a bill to end a partial government shutdown that began on Saturday. The deal passed the US House of Representatives in a 217-214 vote earlier on Tuesday. This headline, along with Kevin Warsh’s nomination by Trump as the next Federal Reserve (Fed) chief, could provide some support to the US Dollar (USD) as it eases some of the concerns over the US fiscal situation and the Fed’s independence.
All eyes will be on the European Central Bank (ECB) interest rate decision on Thursday. The ECB is widely expected to keep its key interest rates unchanged at its February monetary policy meeting, marking the fifth consecutive meeting with no change. Traders will closely monitor the ECB press conference for more clues about interest rate outlook. Any hawkish remarks from ECB President Christine Lagarde could underpin the shared currency against the Greenback in the near term.
“Lagarde is likely to reiterate that the euro-area economy remains in a good place, but risks remain elevated,” said Swedbank economist Nerijus Maciulis. “The first weeks of 2026 have clearly illustrated that trade deals and agreements remain very fragile.”
