The US dollar index continued to come under pressure during the Asian session this week, currently trading around 98.60. The US government shutdown has entered its 21st day, and the Senate has repeatedly failed to reach a funding plan, making the market cautious about the US dollar and reducing overall risk appetite.

Several Federal Reserve officials expressed a dovish tone. Fed Governor Christopher Waller supported further rate cuts at this month's meeting to address job market instability. St. Louis Fed President Alberto Musalem also indicated support for further rate cuts if employment risks rise and inflation remains under control.

Newly appointed Federal Reserve Governor Stephen Miran has expressed support for a more aggressive path of rate cuts. These dovish signals increase the likelihood of short-term pressure on the dollar. However, easing market concerns about global trade are providing some support.

Analyst Kyle Rodda said, "The market is pricing in an easing of the conflict, but the market may remain nervous before the official announcement." The market is focusing on the upcoming US September CPI data, with overall and core CPI expected to increase by about 3.1% year-on-year.

If the data is higher than expected, it may support a rebound in the US dollar in the short term.

The daily chart shows that the DXY has recently retreated from a high of 100.10, testing support for three consecutive days. The current price is trading in the 98.50–98.60 range, close to its 20-day moving average. Short-term moving averages are trending downward, and the RSI is around 42, indicating a bearish bias, but not yet in oversold territory.

If the index falls below the 98.30 support level, it could extend to the 98.00–97.80 range. Conversely, if it holds above the 98.80–99.00 resistance level, a short-term rebound correction may occur. The overall daily chart pattern suggests a short-term bearish trend, but there is a chance of a rebound, and the market is clearly in a weak and volatile pattern.

Editor's opinion:

The US dollar index remains weak in the short term, weighed down by the government shutdown and the Federal Reserve's dovish stance. We will monitor the impact of CPI data and the progress of the government shutdown on short-term fluctuations. If CPI exceeds expectations or there are positive developments in global trade, the US dollar could experience a temporary rebound. However, daily charts and technical indicators suggest that the overall bearish trend remains intact, with weak and volatile trading remaining the primary trend.