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.