EUR declined against most of its major rivals in the European session on Wednesday, weighed down by expectations that the Eurozone economy would show contraction this quarter due to extended European lockdowns.

Expectations for a decline in the euro area's economy in Q1 heightened after the releases of final services PMI readings for January, which all pointed to the continued contraction in activity in the services sectors of the block's largest economies. However, they were mostly better than feared. 

Meanwhile, Some support for the euro was provided by reports that Italy's president Sergio Mattarella called on former ECB's president Mario Draghi to form a new government as it is unclear if he will have enough support from politics after the country's largest party - the Movimento 5 Stelle (M5S) - indicated its opposition. Draghi accepted a mandate to form the Italian government.