No data, all officials, just look at the minutes: How long can the dollar's silent feast last?
2025-10-08 21:09:16
On Wednesday (October 8), the US dollar index traded around 98.80 before the US market opened, continuing its recent resilience; it briefly approached the 99 mark during the day. Concurrently, US Treasury yields fell overall during the day: the 2-year yield was 3.563% (-0.8bp), the 5-year yield was 3.690% (-1.5bp), the 10-year yield was 4.099% (-2.7bp), and the 30-year yield was 4.691% (-3.5bp).
The US dollar has recently demonstrated remarkable resilience to government shutdown-related risks. The reasons for this are: first, the market generally believes the shutdown will have a limited impact on the economy; second, overseas political developments have distracted attention from the congressional debate; and third, the saying "no bad news is good news"—the data gaps caused by the shutdown, particularly the delayed release of employment data, have actually mitigated negative short-term volatility for the dollar. The real test will come next week. If the September CPI, originally scheduled for October 15th, is delayed, the US dollar could face a pre-event pullback. Polymarket currently gives a roughly two-thirds probability that the shutdown will continue until at least next Wednesday, pricing in an additional week of data vacuum.
During this data-free window, Fed officials' frequent speeches and the FOMC minutes have dominated the conversation. Several officials will speak throughout the week, with Chairman Powell's remarks on Thursday being pre-recorded and without a Q&A session. The minutes are drawing even greater attention. On the one hand, the shutdown has reduced the noise in official data; on the other hand, the context surrounding Miran's joining the Board of Governors and the high probability that he will again raise objections this month, arguing in favor of a 50 basis point rate cut, are likely to be amplified in the minutes and in public opinion. Bowman's recent comments suggest he may resonate with Miran at this month's meeting. Furthermore, Minneapolis Fed President Neel Kashkari has made it clear that he still sees "two rate cuts" this year, consistent with his forward guidance of "two more cuts this year."
Looking at the daily chart, the middle Bollinger Band is at 97.7560, the upper Bollinger Band at 98.7222, and the lower Bollinger Band at 96.7898. The current price has effectively broken above the upper Bollinger Band, indicating that the Bollinger Bands are beginning to open upwards, breaking away from the previous sideways trend and entering the "outside trend" phase. Near-term resistance is at 98.9820, with a key high above at 100.2599. The near-term low of 97.1070 and the key low of 96.2109 form a stepped bottom.
In the MACD, DIFF is 0.1341 and DEA is 0.0066. Both lines are above the zero axis and continue to diverge. The histogram is enlarged at 0.2551, indicating that the bullish momentum is in an expansion phase. The RSI (14) reading is 60.8942, breaking through the equilibrium line of 50 but not yet reaching the typical overbought threshold, leaving room for further upward movement.
Considering the market pattern, the US Dollar Index has previously risen from 96.2109 and, after breaking through 98.70, has a potential target of 100.25. A daily close above 98.7222 (the upper Bollinger Band) and a subsequent bullish candlestick pattern will signal a retracement from 98.9820 to 99.00, signaling a resistance-turned-support zone. Conversely, a dip back below 98.70 and an engulfing close would constitute a classic false breakout.
Support levels to watch include: 98.7222 (upper Bollinger band/dynamic support), 98.00, 97.7560 (middle band/trend support), 96.7898 (lower band), and 96.2109 (key support). Resistance levels to watch include: 98.9820, the dense trading area near 99.13, and the period high of 100.2599.
The recent upward trend is essentially the product of two forces: First, the extended shutdown has created a "data vacuum," making it difficult for the market to obtain new fundamental confirmation, allowing dollar bulls to enjoy a time premium; second, short positions following the previous pullback from below 100 were forced to cover above 98, driving a "short squeeze." Meanwhile, the intensive announcements from Fed officials and the imminent release of minutes have prompted the market to favor "pre-news risk parity" and "post-event repricing."
The key sentiment factor here is that if the minutes reinforce the consensus of the Fed's "two rate cuts this year" and Powell offers no substantive new information, the dollar's upward momentum will likely come from short covering combined with a lack of data disruptions. If the CPI is delayed, the dollar's "no news premium" could persist. The market will then be determined by the minutes and the strength of the language used in the Fed's speeches this week.
Fundamentals
The US dollar has recently demonstrated remarkable resilience to government shutdown-related risks. The reasons for this are: first, the market generally believes the shutdown will have a limited impact on the economy; second, overseas political developments have distracted attention from the congressional debate; and third, the saying "no bad news is good news"—the data gaps caused by the shutdown, particularly the delayed release of employment data, have actually mitigated negative short-term volatility for the dollar. The real test will come next week. If the September CPI, originally scheduled for October 15th, is delayed, the US dollar could face a pre-event pullback. Polymarket currently gives a roughly two-thirds probability that the shutdown will continue until at least next Wednesday, pricing in an additional week of data vacuum.
During this data-free window, Fed officials' frequent speeches and the FOMC minutes have dominated the conversation. Several officials will speak throughout the week, with Chairman Powell's remarks on Thursday being pre-recorded and without a Q&A session. The minutes are drawing even greater attention. On the one hand, the shutdown has reduced the noise in official data; on the other hand, the context surrounding Miran's joining the Board of Governors and the high probability that he will again raise objections this month, arguing in favor of a 50 basis point rate cut, are likely to be amplified in the minutes and in public opinion. Bowman's recent comments suggest he may resonate with Miran at this month's meeting. Furthermore, Minneapolis Fed President Neel Kashkari has made it clear that he still sees "two rate cuts" this year, consistent with his forward guidance of "two more cuts this year."
Technical aspects:
Looking at the daily chart, the middle Bollinger Band is at 97.7560, the upper Bollinger Band at 98.7222, and the lower Bollinger Band at 96.7898. The current price has effectively broken above the upper Bollinger Band, indicating that the Bollinger Bands are beginning to open upwards, breaking away from the previous sideways trend and entering the "outside trend" phase. Near-term resistance is at 98.9820, with a key high above at 100.2599. The near-term low of 97.1070 and the key low of 96.2109 form a stepped bottom.
In the MACD, DIFF is 0.1341 and DEA is 0.0066. Both lines are above the zero axis and continue to diverge. The histogram is enlarged at 0.2551, indicating that the bullish momentum is in an expansion phase. The RSI (14) reading is 60.8942, breaking through the equilibrium line of 50 but not yet reaching the typical overbought threshold, leaving room for further upward movement.
Considering the market pattern, the US Dollar Index has previously risen from 96.2109 and, after breaking through 98.70, has a potential target of 100.25. A daily close above 98.7222 (the upper Bollinger Band) and a subsequent bullish candlestick pattern will signal a retracement from 98.9820 to 99.00, signaling a resistance-turned-support zone. Conversely, a dip back below 98.70 and an engulfing close would constitute a classic false breakout.
Support levels to watch include: 98.7222 (upper Bollinger band/dynamic support), 98.00, 97.7560 (middle band/trend support), 96.7898 (lower band), and 96.2109 (key support). Resistance levels to watch include: 98.9820, the dense trading area near 99.13, and the period high of 100.2599.
Market Sentiment Observation
The recent upward trend is essentially the product of two forces: First, the extended shutdown has created a "data vacuum," making it difficult for the market to obtain new fundamental confirmation, allowing dollar bulls to enjoy a time premium; second, short positions following the previous pullback from below 100 were forced to cover above 98, driving a "short squeeze." Meanwhile, the intensive announcements from Fed officials and the imminent release of minutes have prompted the market to favor "pre-news risk parity" and "post-event repricing."
The key sentiment factor here is that if the minutes reinforce the consensus of the Fed's "two rate cuts this year" and Powell offers no substantive new information, the dollar's upward momentum will likely come from short covering combined with a lack of data disruptions. If the CPI is delayed, the dollar's "no news premium" could persist. The market will then be determined by the minutes and the strength of the language used in the Fed's speeches this week.
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