The dollar is walking into Friday on the back foot, heading for a weekly loss as traders pull back and wait for fresh U.S. data after the government reopened.
It’s not that the dollar looks weak, it’s the uncertainty. When the market has no clear read on the economy, positioning becomes lighter, patience grows, and the big moves get delayed.
Even higher U.S. yields and fading expectations of a December Fed cut weren’t enough to lift the greenback this week. And with stocks and bonds selling off, the whole market feels like it’s trading inside a fog, everyone’s moving, but slowly.
Here’s What You Need to Know:
1. Traders Are Cutting Dollar Exposure Before Big Data Drops
With the government reopened, all the missed economic reports will start hitting next week. That’s a lot of information arriving at once, and nobody wants to be over-positioned.
The dollar index is near 99.14, down about 0.4% for the week. This isn’t a bearish trend, it’s caution.
2. Fed Officials Sound Careful, Not Comforting
Several Fed members warned against rushing into more cuts, citing sticky inflation and a labor market that still looks steady. Normally, that kind of talk supports the dollar. But not this time.
3. The Market Thinks Next Week’s U.S. Data Will Be Ugly
Some analysts expect the upcoming reports to show real weakness. And since the unemployment rate may not even be released because of the shutdown, traders are dealing with partial information.
Rate-cut odds for December are just above 50%, but January is almost fully priced for a cut. That uncertainty keeps the dollar in limbo.
My Takeaway
This week wasn’t about direction, it was about uncertainty.
The dollar isn’t breaking down. It’s waiting.
When the market can’t see clearly, nobody commits big positions. And with next week’s data expected to shift sentiment, today’s price action is simply preparation.
If you’re trading today, keep it simple:
Hold your levels.
Don’t force conviction.
Let the fog clear, the cleaner setups come after the data hits.
Next week will decide the tone.