USD: Dollar waits for data to speak
The 41‑day US government shutdown is set to end this week after the Senate approved a temporary funding measure backed by a group of centrist Democrats yesterday. While the spending package still requires approval from the Republican‑controlled House, expectations are that it will pass – and quickly.
The dollar index has continued to trade range‑bound, finding a one‑month long floor at the 21‑day moving average, while short‑term support at the 99.500 handle held firm – a “first line” of defense with the 21-day MA as back up, suggesting firmer buying interest for now.
Hopes that the government shutdown may be lifted soon were particularly felt across equities, with the S&P closing 1.5 higher. Risk‑on currencies, such as AUD and NZD, have also posted meaningful gains. The dollar is unlikely to benefit as strongly as other risk currencies, as it remains a barometer of investor perceptions of still‑fragile US political stability.
That said, given it continues to retain – albeit more moderately – a risk‑on character this year, showing a positive correlation with S&P 500 daily returns, a return to risk‑on sentiment as the shutdown is lifted could provide some baseline, though limited, support to the greenback. The true directional driver, however, will be the resumption of official government data releases, which will offer a clearer pulse of the US economy and allow markets to recalibrate Fed easing expectations – particularly whether a December cut is truly far from a “forgone conclusion.”
For today, attention turns to the NFIB small business optimism report, expected to show a moderate decline following September’s sharper drop, which ended the recovery streak from April’s lows.
GBP: Sterling slips on labour market miss
The UK labour market report was released this morning, showing average weekly earnings coming in below expectations at 4.8% versus 5% in the three months to September, down from the previous month’s 5%. Meanwhile, excluding bonuses, the prints were on target. Unemployment ticked higher, reaching 5%, also above the 4.9% estimate. What stood out was a complete miss in the payrolled employees monthly change, showing a contraction of 32,000 jobs in October, coupled with a similar revision for September (initially reported at -10k, in line with expectations). In other words, this latest data undermines analysts’ view that while softening, the labour market was somewhat stabilising.
Altogether, the data confirms the dovish bias signalled at last week’s BoE meeting, which had called for further evidence to support the likelihood of a cut in December.
Technically, last Friday the 21‑day moving average crossed below the 200‑day, completing a sequence of bearish crossovers – first below the 100‑day, then the 50‑day, and finally the 200‑day. This progression suggests that short‑term bearish pressure is beginning to contaminate the longer‑term setup, with near‑term weakness now bleeding into the broader trend structure.
As markets digest this morning’s soft data and recalibrate easing expectations for December, we expect GBP weakness to extend as the Asian session gives way to London. GBP/USD eyes 1.3100, with a likely breach if softness mounts on today’s data. For GBP/EUR, support to watch is 1.1340.
Next in line (Thursday), are preliminary Q3 GDP figures, monthly GDP, along with industrial and manufacturing production prints.
EUR: Reading between the ZEW lines
EUR/USD remains rangebound after finding support just below $1.15 last week, with the 21-day moving average acting as a near-term ceiling. While many view $1.1470 as a potential bottom, the pair lacks a clear catalyst to extend its rebound for now. One potential catalyst could be a resolution to the US government shutdown, unlocking delayed data releases – such as the September and October non-farm payrolls – which might offer fresh directional cues for EUR/USD.
On the domestic front, eurozone soft data continues to outpace hard data, with sentiment surveys reflecting resilience despite subdued output. Whether hard data catches up will hinge on how much of this optimism translates into real spending, investment, and production. Q3 GDP is expected to be confirmed at 0.2% q/q, while the German ZEW survey is set to improve again – an important signal for EUR/USD. Historically, ZEW sentiment has shown a positive correlation with the currency, as it captures forward-looking investor expectations for the eurozone’s largest economy. Even if hard data lags, a stronger ZEW can support the euro by reinforcing the narrative that the worst may be behind us.
Yet despite this resilience, downside risks persist. Political friction in France and a deteriorating terms-of-trade backdrop have reintroduced dovish undertones to the euro narrative. ECB officials have increasingly flagged external headwinds, and while the central bank is not priced for further cuts, that in itself limits the euro’s ability to benefit from stronger data.
For now, EUR/USD needs to hold above $1.1515/1.1530 to keep bullish hopes alive. Without a fresh catalyst, the pair may remain becalmed – but we think the broader setup still leans constructive into 2026.
Euro crosses show mixed momentum
Table: Currency trends, trading ranges and technical indicators
Key global risk events
Calendar: November 10-14
All times are in GMT
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
