US Dollar Forecast: DXY Recovers; 50-Day MA Back on Radar as Shutdown Halts Data

Dollar Index Recovers After Weak Start; Turnaround Baffles Traders

The US Dollar Index (DXY) opened Thursday under pressure, sliding to a near one-week low at 97.522, as markets absorbed the impact of poor US employment data and the ongoing government shutdown. However, the greenback staged a mid-morning recovery, briefly turning positive despite no clear fundamental driver behind the rebound.

At 14:30 GMT, DXY is trading 97.897, up 0.194 or +0.20%.

After four consecutive days of losses, the dollar initially slipped further on the back of a dismal ADP employment report, which showed private sector payrolls contracted by 32,000 jobs last month. Expectations had been for a 50,000 job increase. This miss added to growing sentiment that the Federal Reserve could deliver two more rate cuts this year.

Government Shutdown Complicates Fed Outlook

The market is now operating without key US economic releases, as the government shutdown halts the flow of federal data. This has forced traders to rely more heavily on private indicators such as the ADP and Challenger jobs reports, which are moving markets more than usual. The widely watched nonfarm payrolls report, scheduled for Friday, will not be released.

Investor uncertainty is being amplified by political developments, with President Trump’s administration freezing $26 billion in funding targeting Democratic-led states. Traders are also monitoring legal battles involving the Fed, including the Supreme Court’s decision to hear arguments on Trump’s attempt to remove Fed Governor Lisa Cook.

Technical Support Holds—Momentum Builds Near 50-Day MA

Despite the initial weakness, the DXY found technical support for a second consecutive session at 97.412, bolstered by a swing bottom at 97.199. The late-session recovery lifted the index toward its 50-day moving average at 98.048, a key resistance level. A close above this mark could open the door for a move toward the 98.238–98.714 retracement zone, where last week’s rally stalled at 98.605.

The dollar saw its largest losses versus the safe-haven yen, falling 0.3% to 146.69, reflecting risk aversion among traders. The euro edged up 0.18% to $1.1751, supported by firmer euro zone inflation data.

Muted Treasury Moves Signal Caution

US Treasury yields were little changed as markets assess the impact of the data vacuum. The 10-year yield held near 4.11%, while the 2-year yield ticked up to 3.565%, suggesting no major shift in rate expectations despite the shutdown and weak jobs data.

Market Forecast: Dollar Vulnerable Unless Technical Levels Break

While Thursday’s rebound caught many off guard, the lack of a clear catalyst leaves the dollar’s direction uncertain. Unless the DXY breaks decisively above the 50-day moving average at 98.048, pressure from weak data and stalled Fed guidance could keep rallies contained. Traders remain focused on alternative data and Fed speakers in the absence of official reports.

More Information in our Economic Calendar.