The euro fell in European trading on Wednesday against a basket of major currencies, retreating from a two-week high versus the US dollar amid profit-taking and corrective moves, while the greenback strengthened as markets anticipated an imminent end to the longest government shutdown in US history.

Inflationary pressures have eased somewhat for European Central Bank policymakers, following recent data showing a slowdown in inflation across the eurozone in October — boosting expectations for a potential rate cut in December.

Price Overview

The euro fell 0.1% against the US dollar to $1.1570, after opening at $1.1582 and reaching a session high of $1.1587.

The common currency had gained more than 0.2% on Tuesday, hitting a two-week high of $1.1606, supported by private data pointing to weakness in the US labor market.

US Dollar

The US Dollar Index rose around 0.2% on Wednesday, recovering from a two-week low as the greenback strengthened against both major and minor peers.

The rebound came as markets anticipated a resolution to the US government shutdown later today, after the Senate approved a bill on Monday night to restore federal funding and reopen government operations.

The agreement now heads to the Republican-controlled House of Representatives, where Speaker Mike Johnson said he plans to bring it to a vote on Wednesday and send it to President Donald Trump for signature.

Eurozone Interest Rates

Recent data from Europe showed that overall inflation in the euro area slowed in October in line with expectations, while core inflation remained steady — easing some of the pressure on ECB policymakers.

Following the data, money-market pricing for a 25-basis-point rate cut by the European Central Bank in December rose from 10% to 25%.

Investors now await further economic data releases from across Europe, along with comments from ECB officials, to reassess the probability of a December rate move.

The Japanese yen slid to a nine-month low against the US dollar in Asian trading on Wednesday, heading toward losing the 155-yen level for the first time since February, as the greenback strengthened amid growing expectations that the longest US government shutdown in history is about to end.

The yen also came under additional pressure from mounting speculation that Japan is entering a new phase of fiscal and monetary stimulus to support its weak economy, following recent comments from Prime Minister Sanae Takaichi.

Price Overview

The dollar rose 0.4% against the yen to ¥154.79 — the highest level since February — after opening at ¥154.14 and touching a session low of ¥154.04.

The yen ended Tuesday’s session flat against the dollar, after losing around 0.75% over the previous two days amid pressure from Takaichi’s pro-stimulus remarks.

US Dollar

The US Dollar Index rose about 0.2% on Wednesday as it recovered from a two-week low, reflecting renewed strength in the greenback against a basket of major and minor currencies.

The rebound came as markets anticipated an official end to the US government shutdown later today, after the Senate approved a bill on Monday night to restore federal funding and reopen government operations.

The agreement now moves to the Republican-controlled House of Representatives, where Speaker Mike Johnson said he plans to bring it to a vote on Wednesday and send it to President Donald Trump for signature.

Sanae Takaichi

Prime Minister Takaichi announced plans to draft a new multi-year fiscal target designed to allow greater flexibility in government spending — a shift that could weaken Japan’s commitment to fiscal discipline.

She also reiterated her call for the Bank of Japan to move cautiously and slow the pace of rate hikes, emphasizing the need to balance economic growth support with price stability.

Analysts believe Takaichi’s comments may signal the start of a new phase of expansionary fiscal policy to stimulate growth, while simultaneously presenting additional challenges for the Bank of Japan as it seeks to coordinate monetary tightening with a more relaxed fiscal stance.

Interest Rate Outlook

Market pricing for a potential 25-basis-point rate hike by the Bank of Japan in December remains steady around 50%.

Investors are awaiting further data on inflation, unemployment, and wage growth in Japan before reassessing those expectations.

The US dollar fell against most major currencies on Tuesday as markets monitored progress toward ending the government shutdown and digested weak employment data that raised concerns about the health of the labor market in the world’s largest economy.

Data released by ADP showed that the US private sector lost an average of 11,250 jobs per week over the four weeks ending October 25.

Federal Reserve member Steven Miran reiterated on Monday his call for further interest rate cuts to help prevent a potential future slowdown.

In an interview with CNBC, Miran maintained his stance that the Fed should move faster than the traditional quarter-point pace, once again calling for a 50-basis-point (half-point) reduction while emphasizing that at minimum there should be a quarter-point cut.

He said, “Nothing is certain. We could get data that makes me change my mind between now and the decision date. But absent new information that shifts my outlook, looking ahead, yes, I think 50 basis points is appropriate, but at least 25.”

The remarks came as the US Senate made significant progress, with Republicans and Democrats reaching an agreement on a bill to fund the government through January 30 — a step paving the way to end the record-long shutdown that began in early October.

As of 19:46 GMT, the US Dollar Index fell 0.2% to 99.4, after hitting a session high of 99.7 and a low of 99.2.

Canadian Dollar

The Canadian dollar rose 0.1% against its US counterpart to 0.7139 by 19:58 GMT.

Australian Dollar

The Australian dollar fell 0.1% against the US dollar to 0.6530 at 19:58 GMT.

Most US stock indexes fell on Tuesday as pressure on the technology sector persisted and investors awaited the official end of the government shutdown.

Data released by ADP showed that the US private sector lost an average of 11,250 jobs per week over the four weeks ending October 25.

Federal Reserve member Steven Miran reiterated on Monday his call for further interest rate cuts to help prevent a potential future slowdown.

In an interview with CNBC, Miran maintained his view that the Fed should move faster than its typical quarter-point pace, once again advocating for a 50-basis-point (half-point) cut, while stressing that at minimum there should be a quarter-point reduction.

He said, “Nothing is certain. We could get data that makes me change my mind between now and the decision date. But absent new information that shifts my outlook, looking ahead, yes — I still think 50 basis points is appropriate, but at least 25.”

The remarks came as the US Senate made significant progress, with Republicans and Democrats reaching an agreement on a bill to fund the government through January 30 — a move that paves the way to end the record-long shutdown that began in early October.

As of 16:00 GMT, the Dow Jones Industrial Average rose 0.4% (170 points) to 47,540, while the S&P 500 fell 0.3% (20 points) to 6,811, and the Nasdaq Composite dropped 0.8% (185 points) to 23,342.