Published: November 12th, 2025
The US dollar may face fresh pressure this week as Washington edges closer to ending its record breaking six-week shutdown, restoring the flow of economic data that could bolster the case for further Federal Reserve rate cuts.
Late on Monday, the Senate approved a temporary funding measure after right-leaning Democrats struck a deal to drop demands for renewed health-care subsidies. House Speaker Mike Johnson said he expects the bill to pass quickly, paving the way for a full reopening by the end of the week.
“When federal government data returns, it will support the case for further rate cuts and a weaker dollar,” said a note from Goldman Sachs. The return of official economic releases, particularly jobs and inflation data, could highlight a softening labour market and renew expectations for looser policy, reversing some of the support the Greenback enjoyed during the data drought.
Analysts at Commerzbank echoed that view, noting that the dollar had been buoyed by the absence of U.S. data through much of the shutdown. “This support is now likely to disappear,” the bank said in a note, calling the end of the shutdown “a negative factor for the dollar.”
Markets are already gaming out the consequences. With the resumption of official data collection, investors will soon have a clearer picture of America's slowing economy, and with it, a fresh reason to bet against the dollar.
The shutdown has left America's statisticians idle. Key reports on employment, inflation and output have not been published for over a month, depriving traders and policymakers of the raw material on which forecasts depend.
That vacuum, paradoxically, has helped the dollar. The absence of bad news kept speculation about further rate cuts at bay, allowing the currency to hold steady even as growth softened.
For months, Fed officials have struck a delicate balance between inflation anxiety and growth fears. A series of rate cuts earlier this year has failed to convince markets that the battle against inflation is over, even as wage growth softens and job openings fall.
Several governors have recently warned that price pressures remain too high to justify more easing. But others fret that tightening labour conditions could tip the economy into outright disinflation, a spiral not unlike the one that haunted policymakers after the global financial crisis.
Commerzbank argues that, in such a dilemma, the Fed would rather err on the side of employment. “It is easier to bring inflation back under control than to fix an unemployment problem,” the bank wrote this week. A return of weak data could therefore nudge Jerome Powell, the Fed's chairman, to resume cutting earlier than investors now expect.
As the end of the shutdown comes into view, investors' taste for risk is returning. The Australian dollar, a proxy for global growth sentiment, strengthened by 0.7% on Tuesday to $0.6536. Equity markets rose modestly, while haven assets such as the Japanese yen slipped.
Traders are betting that the political compromise in Washington could pave the way for more fiscal spending next year, especially if the Republican Party consolidates control of Congress after the midterm elections. Analysts at InvestingLive, a Toronto-based research firm, said markets appear to be pricing in “two more years of a Republican majority,” which they interpret as a sign of looser purse strings and a friendlier backdrop for equities and commodities.
Yet not all investors are convinced the relief rally has legs. Barclays cautioned that “trading volumes are thin ahead of tomorrow's holiday and most participants are avoiding big directional positions as they grapple with uncertainties still swirling around the state of U.S. fundamentals.” With US bond markets closed for the Veterans Day long weekend, liquidity will be scarce until late in the week.
The dollar index, which measures the currency against a basket of G10 peer fiat currencies, was largely unchanged at 99.6 at time of writing. The yen was trading at 153.98 against the dollar, while the euro hovered around $1.156.
For the euro, the dollar's wobble offers a glimmer of strategic opportunity. Economists at ABN AMRO argue that the perceived decline of US institutions, the firing of watchdogs, the politicization of justice, and the erosion of oversight could undermine confidence in the greenback's long-term dominance.
“The euro is currently the world's second currency to the dollar, but very much a distant second,” the bank noted. To narrow the gap, Europe would need to deepen its economic and fiscal union and build more liquid capital markets. A fully fledged eurobond market, they added, would be a crucial step toward providing the kind of “safe asset” global investors crave.
For now, that remains an aspiration. The eurozone's patchwork fiscal rules and uneven growth make it difficult to sustain the credibility of a shared debt instrument. Yet as America's political brinkmanship becomes an annual spectacle, Europe's relative steadiness could prove an asset in itself.
Meanwhile, the yen and the Aussie are being impacted by domestic developments. In Tokyo, Prime Minister Sanae Takaichi said she would work to relax Japan's fiscal targets to allow more “flexible” spending, effectively softening years of budgetary restraint. The Bank of Japan's latest summary of opinions struck a notably brighter tone, suggesting that “the fog surrounding Japan's economic outlook has begun to clear compared with July.”
Forex traders interpreted that as a hint of a possible rate rise in December, something not seen in Japan for nearly two decades.
In Australia, a hawkish speech by Reserve Bank (RBA) deputy governor Andrew Hauser added fuel to the currency's rally. He said that domestic financial conditions were now “close to neutral,” implying that no further tightening was imminent but that rates were high enough to keep inflation in check. Westpac analysts described the remarks as “hawkish in tone,” adding that they reinforced confidence in the Aussie's near-term momentum.
The return of reliable numbers will restore transparency to policymaking after a month of guesswork. For a global economy hooked on American data, that is reason enough for relief. But for dollar bulls, clarity may prove a mixed blessing.
The Greenback remains the world's reserve currency, but its dominance rests on faith in America's political and institutional resilience, qualities that the shutdown drama has again called into question. The longer Washington's fiscal brinkmanship persists, the easier it becomes for rivals to imagine a post-dollar order.
