Recent talks have highlighted the US government shutdown, focusing on when it might end and how it will be resolved. A Senate vote passed with a 60 to 40 majority, indicating the shutdown may come to an end soon, but some challenges still exist. The US dollar remains strong because there hasn’t been much economic data during the shutdown. As the shutdown ends, we’ll need to consider when the normal flow of data will resume. Data about inflation and the labor market may take time to stabilize. This is because estimated figures replaced actual statistics, leading to worries about accuracy.

Expectations Of A Weaker US Dollar

There are growing concerns about a weaker US dollar due to Donald Trump’s criticisms of the Federal Reserve and his calls for lower interest rates. Other important factors include possible changes in leadership and court decisions that could impact the Fed. Trump’s unpredictable social media behavior makes it difficult to accurately predict movements in EUR/USD. Looking back at major events like the US government shutdown from 2018-2019, we see how missing economic data can create a false sense of security for the dollar. During that time, the absence of negative reports helped to temporarily support the dollar. This serves as an important reminder as we navigate the current market. In the upcoming weeks, traders should be cautious about potentially unreliable data, similar to what we experienced in the past shutdown. For example, the initial non-farm payroll report for October 2025 was revised down by a large 60,000, highlighting how misleading initial figures can be. This suggests that strategies benefiting from increased volatility, like straddles on EUR/USD, might be wiser than simply betting on one direction.

Political Pressure And Currency Volatility

Political pressure on the Federal Reserve was a significant issue during the Trump administration, and it remains crucial for the dollar today. We see similar patterns now, as ongoing fiscal debates in Congress create uncertainty about the Fed’s future policies into 2026. This political uncertainty is driving higher implied volatility in EUR/USD options, rising from 5.8% in September 2025 to over 7.2% now. Thus, the main risk for the dollar isn’t just one negative data point, but rather the return of accurate economic reports that might show a weaker picture than what the market currently expects. The Bureau of Labor Statistics has noted challenges with survey response rates, meaning upcoming inflation and jobs data for November 2025 may have a higher-than-normal margin of error. Traders should think about hedging long-dollar positions or using derivatives to shield against any sudden drop in the currency. Create your live VT Markets account and start trading now.

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