EUR/USD Forecast: Euro Strengthens as Dollar Slips Before Government Funding Decision

💶 EUR/USD Gains for Sixth Day as Dollar Momentum Fades

The Euro (EUR) continues to strengthen against the US Dollar (USD) on Wednesday, marking its sixth straight day of gains as the Greenback loses traction ahead of a pivotal US congressional vote to end the record-long government shutdown.

At the time of writing, EUR/USD trades near 1.1589, recovering from an intraday dip toward 1.1594, as investor sentiment improves and fiscal concerns ease in the United States.

🏛️ US House Prepares for Crucial Shutdown Vote

All eyes are on Washington as the US House of Representatives prepares to vote Wednesday evening on a bill to reopen the government and restore federal operations.

House Majority Leader Steve Scalise confirmed the vote is expected around 7 p.m. ET, following the Senate’s 60–40 bipartisan approval earlier this week.

If passed, the bill will move to President Donald Trump for final approval, ensuring government funding through January 30, 2026, and extending select departmental allocations through September 30, 2026.

The progress has helped ease short-term fiscal risks and boosted market optimism, though investors remain cautious about long-term spending and debt concerns.

🇪🇺 Euro Finds Support from German Inflation and ECB Rhetoric

On the European side, the Euro finds additional backing from steady German inflation data and hawkish signals from European Central Bank (ECB) officials.

Germany’s Harmonized Index of Consumer Prices (HICP) rose 0.3% month-on-month and 2.3% year-on-year in October—exactly in line with forecasts—confirming that inflation remains stable across the bloc’s largest economy.

ECB policymaker Isabel Schnabel noted that the Eurozone economy retains “positive underlying momentum” and highlighted that services inflation remains sticky. She added that interest rates are “in a good place,” while inflation risks are “tilted slightly to the upside,” suggesting the ECB is comfortable holding current policy levels for now.

🌍 Market Focus: US Data Delays and Eurozone Outlook

Traders remain attentive to the shutdown vote outcome in the US, which could influence the release schedule for delayed economic data such as the Consumer Price Index (CPI).

In Europe, attention now shifts to Thursday’s Eurozone Industrial Production report, expected to provide insights into manufacturing momentum amid mixed global signals.

If the US government reopens as expected, fresh data could guide the Federal Reserve’s next policy steps, with markets still pricing in potential rate cuts if economic softness persists.

💹 US Dollar Weakness Broadens Across Majors

The US Dollar Index (DXY) remains under pressure, with the Greenback posting mixed performance against major peers. The USD showed broad weakness, particularly versus the Euro and Swiss Franc, while holding modest gains against the Japanese Yen.

The heat map highlights the EUR’s overall strength, driven by rising confidence in the Eurozone’s inflation outlook and resilient monetary policy stance from the ECB.

📊 Technical Outlook: Bulls Eye 1.1600 Breakout

From a technical perspective, EUR/USD continues to show constructive momentum, holding firmly above the 1.1550–1.1570 support zone.

• Immediate Resistance: 1.1600 (psychological level)
• Next Upside Target: 1.1650 (October swing high)
• Key Support Levels: 1.1550 → 1.1520 → 1.1480

The Relative Strength Index (RSI) hovers near 65, suggesting room for additional upside before overbought conditions emerge. A confirmed close above 1.1600 would strengthen bullish momentum toward 1.1650–1.1700 in the near term.

🧭 Outlook: Euro Remains Firm Above 1.1550

The EUR/USD pair remains well-supported amid broad Dollar weakness, stable Eurozone data, and hawkish ECB commentary. While a successful US House vote could temporarily limit upside, the Euro’s medium-term bias stays bullish above 1.1550.

Traders will closely monitor political headlines and upcoming data releases for fresh catalysts, with the 1.1600–1.1650 range serving as a key technical battleground for short-term direction.

✅ Summary Table

Conclusion:
The Euro extends its winning streak against the Dollar as market optimism builds around a US government reopening and dovish Fed prospects. With ECB confidence and technical momentum favoring the bulls, EUR/USD remains poised to test 1.1600 in the sessions ahead.

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