EUR/USD Moves and Government Shutdown Update EUR/USD fell to around 1.1550 as the US Dollar gained strength. This happened after reports indicated that the US government shutdown may soon end. Senate Democrats have agreed on a deal to reopen the government and secure funding. Under this agreement, federal employees will receive back pay, and states can restart federal transfers. Some departments will get funding until January 30, while others will receive full-year allocations. US Treasury Secretary Scott Bessent mentioned that the shutdown’s effects on the economy are worsening, but improvements in inflation and a drop in prices are expected. The US Dollar weakened due to a drop in consumer sentiment, with the University of Michigan’s index falling to its lowest level since June 2022. EUR/USD could get stronger, as the Euro might benefit from different policy outlooks between the European Central Bank (ECB) and the Federal Reserve. The ECB is expected to keep interest rates steady, with market expectations for a rate cut in September 2026 now down to 45%. The Euro is the second most traded currency, making up 31% of forex transactions in 2022. The ECB plays a key role in managing monetary policy, impacting the Euro’s value. Key elements such as economic data, inflation, and the trade balance significantly influence the Euro’s strength. US Dollar Sensitivity to Political Events Today, November 10, 2025, we’re witnessing changes in the EUR/USD pair that reflect historical patterns. In the past, the end of a US government shutdown pushed the pair down to about 1.1550, a level much higher than the current level of around 1.08. This shows how responsive the dollar can be to political stability in Washington. Concerns about US fiscal health are still a big focus for traders, just as they were in previous years. The Congressional Budget Office recently projected a federal deficit that could exceed $2 trillion annually for the next decade, keeping the door open for funding disputes. We should be ready for potential dollar fluctuations around fiscal deadlines, which can create quick trading opportunities. Current US economic data remains crucial. In the past, the University of Michigan Consumer Sentiment Index dropped to 50.3 during a shutdown. Today, however, the index is much healthier, with an October 2025 reading of 67.0. This suggests a more resilient US consumer, offering support for the dollar. The difference between the Federal Reserve and the European Central Bank is clearer than ever. The current interest rate gap favors US dollars, as the Fed Funds Rate is at 4.75% while the ECB’s deposit rate is at 3.50%. This wide gap continues to weigh on the EUR/USD pair. ECB’s Role in Stabilizing the Euro ECB officials are still cautious about inflation, which is currently at 2.7% in the Eurozone, above their 2% target. This hawkish stance is helping to support the Euro, preventing a more significant decline. It creates tension between the hefty rate differential and the ECB’s hesitance to signal future rate cuts. For derivative traders, this situation indicates that while the overall trend may favor the dollar, the Euro’s downside is limited by the ECB’s position. Strategies that take advantage of volatility, like buying straddles ahead of US inflation data or ECB policy meetings, could be useful. Additionally, selling covered calls on long EUR/USD positions could help generate income while recognizing the pair’s limited upside potential in the coming weeks. Create your live VT Markets account and start trading now.

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