Micah Jonah
February 4, 2026
The United States dollar eased slightly against the euro on Wednesday as uncertainty over the Federal Reserve’s policy direction deepened following delays in the release of key US labour market data.
Market sentiment was affected by the recent partial shutdown of the US government, which led to the postponement of important employment figures that investors usually rely on to gauge the health of the American economy and the likely path of interest rates.
Against the euro, the dollar softened modestly as traders remained cautious ahead of policy signals from the European Central Bank. The euro gained support from expectations that the ECB will maintain its current stance while monitoring the impact of the currency’s recent strength on inflation and growth across the eurozone.
The yen, however, continued to weaken against the dollar, marking its fourth consecutive daily decline. The Japanese currency came under pressure ahead of national elections, with investors concerned that proposed spending increases, tax cuts and an expanded security strategy could worsen Japan’s already heavy debt burden.
Political developments in Japan have also unsettled markets, as mixed messages from the government on the benefits of a weaker yen have raised fears of further currency depreciation and volatility in government bond markets.
Meanwhile, the US dollar index, which tracks the greenback against a basket of major currencies, remained broadly stable, reflecting a cautious wait and see approach by global investors.
Other major currencies showed mixed movement. The British pound strengthened slightly ahead of the Bank of England’s policy meeting, while the Australian dollar advanced after the country’s central bank raised interest rates, boosting investor confidence.
China’s yuan also recorded gains, supported by strong export performance and firm guidance from the central bank, although authorities appear keen to prevent excessive appreciation that could hurt the domestic economy.
Overall, currency markets remain sensitive to political developments, central bank decisions and delayed economic data, with investors positioning carefully amid lingering global uncertainty.
