EUR/USD. Analysis and Forecast

[Ben Graham]

On Wednesday, the euro rose against the U.S. dollar, recovering previous losses as the dollar's rally slowed ahead of a key congressional vote to end the longest government shutdown in U.S. history. At the time of writing, the EUR/USD pair is trading around 1.1590, marking its sixth consecutive day of gains.

Later on Wednesday, the House of Representatives is expected to vote on a bill that would resume federal government operations and restore budget funding. House Majority Leader Steve Scalise told CNBC that a decision is expected today. This follows Monday's vote in which both chambers expressed support for the bill, with the Senate passing it 60–40.

This major step has helped ease fears of short-term budget crises and boosted investor sentiment. If the bill is approved, it will be sent to President Donald Trump for signing. The document provides for a temporary extension of funding for most federal agencies until January 30, 2026, and continued funding for some departments until September 30, 2026.

As for the euro, the currency receives moderate support from stable German inflation data and the confident tone of ECB policymakers. According to the latest data, Germany's Harmonized Index of Consumer Prices (HICP) rose by 0.3% month-on-month and 2.3% year-on-year in October, matching analysts' expectations and confirming stability in inflation trends across the euro area.

Earlier today, ECB member Isabel Schnabel stated that the bloc's economy continues to show "positive momentum", with service-sector inflation remaining stable. She emphasized that current interest rates remain at an appropriate level, although inflation risks are "slightly tilted to the upside," which reinforces the ECB's readiness to maintain its current stance.

For now, investors should closely monitor developments in Washington as the vote takes place, while in Europe, attention will shift to Thursday's eurozone industrial production report.

In the U.S., uncertainty caused by delays in publishing key macroeconomic data, including the Consumer Price Index (CPI), continues to keep markets cautious and influences expectations regarding the Federal Reserve's monetary policy.

From a technical perspective, bulls should remain cautious, as oscillators on the daily chart have not yet turned positive. The main support currently lies at the confluence of the 14-day and 9-day EMAs, located around 1.1569. Below that, the price could pause at 1.1550 and 1.1540, before testing the psychological level of 1.1500.

On the other hand, resistance is found at the 21-day SMA near 1.1590, followed by the round level of 1.1600. Breaking above these levels would strengthen the bullish outlook.

Below is a table showing percentage changes in the U.S. dollar's exchange rate against the major traded currencies. As of today, the dollar is strongest against the Japanese yen.

The material has been provided by InstaForex Company - www.instaforex.com