The USD remains firm toward the end of the trading week, holding modest gains even as momentum begins to fade. According to Scotiabank’s Chief FX Strategists, Shaun Osborne and Eric Theoret, the US Dollar Index (DXY) is hovering slightly higher overall, with the Euro (EUR) being the only major currency showing green on the day.
Despite encouraging developments in global trade and monetary policy, the USD remains firm but unable to extend its rally past the mid-99 range — a level that continues to act as solid resistance for the DXY.
Limited Momentum Despite Positive Economic Drivers
Currency strategists noted that both the Australian Dollar (AUD) and New Zealand Dollar (NZD) are underperforming following weaker-than-expected Chinese Manufacturing PMI data, which also weighed on regional equities. While these results typically favor the US Dollar, buying pressure this week appears tepid.
“The USD remains firm, but not convincingly so,” Osborne and Theoret wrote. “Even with supportive factors like improving trade outlooks, monetary policy adjustments, and potential month-end demand, the DXY has yet to show the strength needed to break decisively above its current range.”
The pair added that current DXY correlations with risk assets, bond yields, and volatility are weak and trending toward neutral. This lack of correlation signals that traders may be waiting for a new catalyst before driving the dollar higher.
Eyes on the Week’s End for Direction
As markets move into the final trading sessions of the month, attention now turns to whether the USD remains firm enough to extend its momentum into early November. Scotiabank strategists warned that if recent patterns persist — similar to the 2016–2017 DXY roadmap — the broader stabilization seen since midyear could start to fade.
Compounding uncertainty, the ongoing US government shutdown, now on its 31st day, has delayed the release of key economic reports including Personal Income, Spending, and PCE data. Meanwhile, the Chicago PMI report is expected at 9:45 ET, and as the Federal Reserve’s quiet period ends, several Fed officials are anticipated to make public remarks — potentially influencing market sentiment.
For now, the USD remains firm, but the coming days will reveal whether the dollar has enough strength to sustain its recent resilience or if another round of consolidation lies ahead.
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