The US dollar index is approaching its resistance zone; continue to monitor Federal Reserve policy and economic data.
2025-11-05 14:26:00
The US dollar index (DXY) fell back to around 100.15 during Asian trading hours, after hitting a three-month high of 100.25.
The main reason for the pressure on the US dollar is that the US government fiscal shutdown has entered its 36th day, a length that matches the record set in 2019 and is on track to become the longest shutdown in US history.
The fiscal impasse has increased market concerns about the US economy, potentially putting downward pressure on the dollar. The recent short-term funding bill, pushed by Republicans, was rejected for the 14th time in the Senate, leading to a strong wait-and-see attitude in the market.
The Federal Reserve's policies have provided some support for the dollar. Following the October meeting, the target federal funds rate remained at 3.75%-4.0%, and Chairman Jerome Powell stated that further rate cuts by the end of the year are "not a certainty."
Traders, using the CME FedWatch tool, have calculated that the probability of a December rate cut has fallen from 93% last week to about 70%, providing some support for the dollar. The market is also focused on the upcoming US October ADP non-farm payroll data and the ISM services PMI.
The ADP non-farm payrolls report is expected to show an increase of 25,000 jobs, compared to a previous figure of 32,000 job losses. Stronger-than-expected data could provide a short-term boost to the US dollar against other major currencies.
From a technical perspective, the DXY has retreated in the short term but remains within the 100-101 range. Short-term support is seen around the psychological level of 100, while resistance lies at 101-101.5. The future movement of the US dollar index will continue to be influenced by the US fiscal impasse, the Federal Reserve's policy stance, and economic data.
Editor's Note:
The US dollar index is currently exhibiting a pattern of "coexisting pressure from the fiscal shutdown and support from Federal Reserve policy." The extended US government shutdown increases economic uncertainty, putting downward pressure on the dollar; however, uncertainty surrounding a year-end rate cut by the Federal Reserve and upcoming economic data provide support for the dollar at its bottom.
If the fiscal impasse eases or economic data is stronger than expected, the DXY may return to an upward trend; if the shutdown continues or economic data falls short of expectations, the dollar will come under pressure and fall.
The main reason for the pressure on the US dollar is that the US government fiscal shutdown has entered its 36th day, a length that matches the record set in 2019 and is on track to become the longest shutdown in US history.
The fiscal impasse has increased market concerns about the US economy, potentially putting downward pressure on the dollar. The recent short-term funding bill, pushed by Republicans, was rejected for the 14th time in the Senate, leading to a strong wait-and-see attitude in the market.
The Federal Reserve's policies have provided some support for the dollar. Following the October meeting, the target federal funds rate remained at 3.75%-4.0%, and Chairman Jerome Powell stated that further rate cuts by the end of the year are "not a certainty."
Traders, using the CME FedWatch tool, have calculated that the probability of a December rate cut has fallen from 93% last week to about 70%, providing some support for the dollar. The market is also focused on the upcoming US October ADP non-farm payroll data and the ISM services PMI.
The ADP non-farm payrolls report is expected to show an increase of 25,000 jobs, compared to a previous figure of 32,000 job losses. Stronger-than-expected data could provide a short-term boost to the US dollar against other major currencies.
From a technical perspective, the DXY has retreated in the short term but remains within the 100-101 range. Short-term support is seen around the psychological level of 100, while resistance lies at 101-101.5. The future movement of the US dollar index will continue to be influenced by the US fiscal impasse, the Federal Reserve's policy stance, and economic data.
Editor's Note:
The US dollar index is currently exhibiting a pattern of "coexisting pressure from the fiscal shutdown and support from Federal Reserve policy." The extended US government shutdown increases economic uncertainty, putting downward pressure on the dollar; however, uncertainty surrounding a year-end rate cut by the Federal Reserve and upcoming economic data provide support for the dollar at its bottom.
If the fiscal impasse eases or economic data is stronger than expected, the DXY may return to an upward trend; if the shutdown continues or economic data falls short of expectations, the dollar will come under pressure and fall.
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