The US Dollar showed mixed results in trading. It weakened against major currencies but gained some strength against Asian currencies, like the Japanese Yen. As of reporting by OCBC’s FX analysts, the Dollar Index was at 99.32. A new funding measure in the US Senate passed the House with a vote of 222-209 and has been signed into law. This ends the longest government shutdown in US history. However, the White House stated that the release of October jobs and CPI data might be postponed.

Technical Analysis

The mild bullish trend for the Dollar Index has eased, though the Relative Strength Index (RSI) has risen. We expect continued two-way trading, with resistance identified at 100 (the 200-day moving average) and 100.6 (76.4% Fibonacci level). Support levels are marked at 99.10/30 (21-day moving average, 50% Fibonacci retracement) and 98.30/50 (50 and 100-day moving averages, 38.2% Fibonacci level). Currently, the US Dollar Index is trading around 104.50, but the recent upward momentum has slowed. This pattern often occurs as bullish momentum wanes near important technical levels while traders await new developments. In the coming weeks, attention will focus on any guidance from the Federal Reserve regarding interest rates for 2026. The latest Consumer Price Index (CPI) report was slightly higher than expected at 3.4% year-over-year. This has kept traders from heavily shorting the dollar. However, Non-Farm Payroll data showed job growth dropping to 170,000, which supports the case for potential rate cuts. This mixed data creates conditions for two-way trades, similar to the uncertainty observed in the late 2010s.

Market Strategies

For derivative traders, making only directional bets with simple calls or puts is risky in this setup. Instead, we recommend strategies that benefit from increased volatility, like buying at-the-money straddles on major currency pairs such as EUR/USD. Implied volatility in the options market has reached a three-month high, indicating the market is preparing for significant price fluctuations. Technically, we are monitoring resistance at the 105.20 level, which is the recent multi-month high. Key support is near the 50-day moving average, currently around 103.80. Unlike risks of the past, such as the lengthy government shutdown in 2019, today’s challenges stem from unexpected economic data rather than political stalemate. Create your live VT Markets account and start trading now.

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