The US dollar index (DXY) fell slightly to around 98.75 in Asian trading on Thursday, affected by the extension of the US government shutdown and concerns about the economic outlook.

DXY measures the performance of the US dollar against six major currencies, and its decline reflects the shift in market risk aversion and concerns about short-term pressures on the US economy.

On Wednesday, the Senate again rejected a solution proposed by both Republicans and Democrats, leaving the shutdown deadlocked. As the shutdown enters its ninth day with no sign of resolution, the market is concerned that the shutdown could have a greater negative impact on fiscal spending, economic growth, and the US dollar exchange rate.

This uncertainty has put pressure on the US dollar, providing some support to major currencies, especially the euro and the yen.

The minutes of the Federal Reserve's September meeting showed that most officials supported a rate cut and hinted at the possibility of further cuts this year, but some officials expressed concerns about inflation and leaned toward caution. According to the CME FedWatch tool, the market generally expects a 25 basis point rate cut in October, with a nearly 78% probability of another cut in December.

This policy expectation has exacerbated short-term pressure on the US dollar. Analysts point out that the short-term downward pressure on the US dollar is mainly due to the government shutdown and the market's reaction to the Fed's interest rate cut expectations. If economic data or Powell's speech are hawkish, the US dollar may see a technical rebound.

The daily chart of the US dollar index shows that DXY has fallen below the 99 mark from last month's high. Currently, the short-term moving averages are arranged downward, MACD extends below the zero axis, and RSI is close to the 45 level, indicating that short-term bearish momentum prevails.

If the price falls below the support level of 98.50, the short-term downside may extend to 98.20; the upper resistance level is between 99.20 and 99.50. The overall technical structure is biased towards a consolidation and downward pattern.

Editor's opinion:

The dollar's pressure reflects market uncertainty about U.S. policy and economic prospects. In the short term, the extended government shutdown and weak economic data will continue to limit the dollar's rise, but speeches by Federal Reserve officials or unexpected hawkish rhetoric may provide short-term support.

We should pay attention to the initial jobless claims data and Powell's speech, which may determine the short-term direction of DXY. Overall, the US dollar is still mainly volatile and downward in the short term, but if policy risks are eliminated, there is a chance of a rebound.