The US Dollar (USD) is showing mixed trading results due to the lack of new developments. The DXY index is currently at 99.50. Daily momentum is slowing, and the RSI is declining, suggesting ongoing two-way trading. Resistance levels are at 100.40/60 and 101.20, while support is at 99.10 and between 98.20/40. A vote in the House, led by the Republicans, is expected to end the government shutdown soon, but we don’t know when normal data releases will restart. Important reports, such as the CPI, PPI, and retail sales, set for Thursday and Friday, might be delayed. Historically, after a shutdown, previously collected data is often released gradually and not just on the next scheduled date.

Market Observations And Insights

The FXStreet Insights Team collects market observations from experts, blending commercial notes with insights from various analysts. This provides a solid view of the current USD trading situation and the impacts of delayed data from the US government shutdown. Currently, the US Dollar is trading within a narrow range, with the DXY index around 99.50. The market lacks clear direction due to the government shutdown delaying critical economic reports. Traders should monitor resistance near the 100.40/60 levels and support at 99.10. Without new data, we have limited visibility in the market, which increases our dependency on technical levels. The postponed CPI and retail sales figures mean we cannot gauge inflation or consumer spending accurately. This uncertainty is likely to keep the dollar trading within a range until the shutdown ends and data begins flowing again. Before the shutdown, the October CPI was slightly higher at 3.4%, raising concerns about the Federal Reserve’s next move. Fed officials emphasize their data-dependent approach, which makes the upcoming delayed reports even more crucial for setting policy expectations. This could lead to significant reactions once the data is released. Looking back at the 2018-2019 government shutdown, we experienced a similar pause, followed by a sudden influx of economic data. This “data dump” caused a spike in market volatility, as traders scrambled to digest months of information at once. We expect a similar situation in the coming weeks.

Buying Volatility As A Strategy

Given this scenario, buying volatility might be a smart strategy. Since the DXY is stuck in a tight range, implied volatility on dollar options is relatively low, but this is likely to change. Traders could consider long straddles or strangles on major pairs like EUR/USD to potentially profit from a large market move in either direction when the data is released. The immediate focus is the House vote, which is likely to pass and end the shutdown. Once that happens, the attention will shift to the new schedule for releasing the delayed reports. A packed release schedule could lead to a chaotic trading environment as markets react to several important data points at the same time. Create your live VT Markets account and start trading now.

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