The US Dollar Index rebounded during Wednesday's European session, reaching 98.98, breaking through a two-month consolidation range. The gains have now narrowed to 0.20%. Over the past few trading days, the US dollar has demonstrated remarkable resilience to government shutdown-related risks. We attribute this to two core factors: first, the market generally expects the actual economic impact of the federal government shutdown to be manageable; second, political developments elsewhere are diverting market attention away from the internal wrangling in the US Congress.



As the saying goes, "no news is good news," and the shutdown has led to a lack of new weak economic data released domestically (especially data related to the state of the U.S. job market), which may also provide implicit support for the U.S. dollar.

Coincidentally, there was no primary economic data scheduled to be released in the United States this week, so the current data delay has limited actual impact on the market.

But next week will be a very different story – it will be worth tracking whether the US dollar will come under selling pressure if the September Consumer Price Index (CPI) report, originally scheduled for release on October 15, is delayed.

According to Polymarket's probability model, there is now a two-thirds chance that the shutdown will last at least until next Wednesday, so the probability of data delay is high.

In the coming days, the market will continue to see speeches from several Federal Reserve officials, including a public statement by Federal Reserve Chairman Powell on Thursday night, and the latest meeting minutes of the Federal Open Market Committee (FOMC) will also be released in the early hours of Thursday morning.

Judging from the current fundamentals and policy logic, we believe that the Federal Reserve has no reason to abandon its policy guidance of implementing two more interest rate cuts this year.

Technical Analysis:

After breaking through 97.60, the US dollar index formed a bottoming out pattern, and then it fell back to the neckline and continued to rise. Today's rise broke through the upper edge of the previous box of consolidation. At the same time, this position is also the measured increase of the bottoming out pattern, which is equivalent to breaking through two key price levels in one day.

The current maximum pressure level is near the 100.00 integer mark, which is also the bull and bear indicator line of the US dollar index and the 50% percentile of the big negative line released by the non-farm payrolls on August 1 this year. At the same time, there is also a strong downward pressure line that limits the continued rebound of the US dollar.

The current support is at the upper edge of the box near 98.60 and the neckline of the bottom-breaking pattern at 97.61 below. The pressure level is near the 100.00 integer level and the gradually moving downward downward pressure line.


(Daily chart of the US dollar index, source: Yihuitong)

At 21:40 Beijing time, the US dollar index is currently at 98.76.