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DXY LOOKS HEADED LOWER IF GOVERNMENT SHUTDOWN CONTINUES INTO DECEMBER

ADMIN || 7th November 2025

The Bloomberg Dollar Spot Index is set for a fresh wave of declines as concerns mount about cracks in the US labor market, along with an extended government shutdown. Private sector jobs are cratering, with a shutdown that’s starting to impact domestic travel as the Thanksgiving holiday season approaching.

In contrast, Asia and Europe and more appealing for currency plays with the PBOC backstopping the yuan, while the Euro is finding a floor at a higher level than the selloff in late-July.

DXY tested the 200 DMA at 100.30 and got totally rejected at these levels.

As the government shutdown extends the data vacuum, traders are relying on alternative sources for direction, and the signals aren’t comforting. With alternative private jobs data such as Revelio Labs and Challenger job cuts being softer than market estimates, DXY will find it hard to regain it’s footing.

Dollar has recently started trading as an EM fx which gets hammered in risk off situations. Now EUR & to some extent JPY remain gainers in risk offs.

The upside for a weighted basket of two-year rate differentials may not have much more scope to run if markets turn back toward fully pricing a December cut.

Several factors could still extend the greenback’s rally, but its domestic vulnerability is now back in focus. The more the labor narrative softens, the greater the risk that yield-driven support turns from tailwind to trap.

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