The US Dollar Index (DXY) remained steady around 98.9 on Thursday, maintaining its position near a two-month high after advancing by 0.9% over the previous three sessions. The dollar’s momentum was largely sustained by the relative weakness of other major global currencies.
Analysts noted that the ongoing market developments continue to bolster the greenback’s rally, even as occasional sell-offs emerge amid a fragile economic sentiment. Investor optimism persists following the Federal Open Market Committee (FOMC) minutes, which reaffirmed policymakers’ shared goal of fostering employment growth while guiding inflation toward the 2% target.
However, a brief wave of dollar selling was observed as investors sought refuge in safe-haven assets amid the ongoing US government shutdown. Although gold initially dipped, renewed buying activity around the $4,000 mark pushed its price close to $4,038.
During early European trading, limited follow-through dollar buying was recorded before early gains were pared back. This left the greenback mixed against G10 currencies, with the Scandinavian currencies, British pound, and New Zealand dollar notably underperforming.
The dollar strengthened against the Japanese yen after conservative politician Sanae Takaichi secured victory in Japan’s leadership contest, fueling expectations of increased fiscal spending. Meanwhile, markets reacted to Beijing’s announcement of new export controls on critical minerals and related technologies.
Across Europe, the euro came under further pressure amid rising political uncertainty in France. President Emmanuel Macron disclosed that a new prime minister would likely be appointed within 48 hours to stabilize governance.
Back in the United States, the ongoing government shutdown continues to stall the release of vital economic indicators, leaving traders reliant on limited private-sector data to assess market conditions.
Despite these uncertainties, traders remain confident that the Federal Reserve will deliver two additional 25-basis-point rate cuts before year-end, as indicated by the latest meeting minutes where policymakers weighed employment risks against persistent inflationary pressures.
Currency market analysts observe that US dollar pairs are showing renewed volatility after a relatively calm trading week, suggesting potential opportunities for short-term traders in the days ahead.
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