US dollar traded flat on Monday as the likelihood of a US government outage increased. The US Currency seeks guidance for trajectory.

US dollar key points to watch

The dollar traded sideways on Monday as the likelihood of a US government disruption increased.

As the backdrop, investors will be watching for US GDP data in the coming days.

The US DXY is close to 6-month peaks.

After a turbulent week, the (USD) reaffirmed its throne. The Fed couldn’t get any clearer, confirming once more that interest rates in the US will remain elevated for a longer duration. Because of the rate disparities, the US dollar is the stronger companion in a majority of trading pairings.

Among all the macroeconomic disturbances, investors were unconcerned with the US govt shut until late Friday afternoon. After House Speaker McCarthy, sent house Members home over the weekend this past Friday. Markets understood that a settlement may yet again be delayed till the final minute. This implies that a risk premium may arise as the days go.  Sans any optimistic signs from the White House about a potential compromise.

US dollar Investors wary of the bills outcome

Apart from the Fed, there were several other political matters to worry about, especially the federal government closure the following weekend.

At this point, Congress has not managed to complete one of the Twelve regular budget measures.  That fund federal agencies activities in the financial year beginning Oct. 1 – Inability to reach a compromise by October implies Washington will soon run out of funds needed to maintain the administration afloat.

House Speaker Kevin McCarthy is going to pursue a bold approach during the week to gain passage on four key legislation.  Covering defense & homeland safety financing.  Which he believes would bring about enough advancement to secure the backing of far-right Republican for a temporary budget act.

US the ten-year Treasury rates have returned to near 16-year peaks approximately 4.5 percent recorded this past week. The greenback rose throughout all markets. Reaching its best level in March versus £1.

US dollar technical Analysis

The US currency appears to be caught in a rut.  Alongside the exchange rate disparity maintaining its position ahead of the rest of the G20 peers. On the contrary hand, the Detroit automakers lockout and the possibility of a USA government shut.  Could have impacts on the USD in the near future. During this challenging situation, the (DXY) is seeking for directions.

This Monday, the DXY begins over 105.50, indicating that it may rise further. If the index closes over the annual top around 105.88. The U.S. Dollar will likely continue to rise in the short to medium run.  The US T-yields, as well as the resolution of the dispute ongoing government closure, are all critical in maintaining present DXY values.

DXY Performace Indicators (Monday-Sep, 26)

Technical Summary