The global forex market witnessed turbulence this week, with the U.S. dollar index dipping 0.15% to 99.56 on Friday (November 7), marking a 0.15% weekly decline and ending its two-week rally. Investors grappled with the Fed's hawkish outlook and U.S. economic concerns, driving broad-based dollar weakness against the euro and Swiss franc. The prolonged Washington government shutdown—now the longest in history—delayed October’s nonfarm payrolls report, nudging 10-year Treasury yields down 0.2 bps to 4.091%. After a five-day rally since last Wednesday, the dollar reversed sharply on Thursday as weak private payroll data triggered panic selling.

**Shutdown Sparks Layoffs, Data Blackout** The government standstill forced traders to rely on private-sector reports, revealing steep job cuts in government and retail sectors amid cost controls and AI-driven layoffs. Westpac noted surging Challenger job-cut figures signal rapid labor market cooling. Convera strategist Antonio Ruggiero warned: "Data voids fuel investor delusion—bad news like Challenger triggers violent dollar unwinding." CME’s FedWatch shows a 67% chance of a December rate cut, with traders pricing in multiple 2026 easings. Franklin economist Mohit Kumar cautioned that Fed Chair Powell’s recent remarks raised the bar for December cuts, leaving markets hypersensitive to labor signals.

**Dollar Index: Rebound Hopes Dashed** The dollar led G10 losses as weak private data and 200-DMA resistance fueled shorts. While TS Lombard’s Andrea Cicione sees rebound potential from strong U.S. growth, market surveys reveal net short dollar positions for November. Chicago Fed’s Goolsbee added uncertainty, stating shutdown-delayed inflation data warrants caution: "In fog, slow down." Powell’s earlier dovish tilt had spurred a five-day dollar rally—until Thursday’s labor shock erased gains.

**Euro Rebounds: Stability vs. Fed Easing** EUR/USD rose 0.15% to 1.1564 Friday, up 0.23% weekly, snapping two weeks of declines. ECB rate stability contrasted with expected U.S./UK 2026 cuts. China’s October export plunge (-7.1% YoY, worst since February) highlighted global risks, yet euro drew haven flows.

**Yen Rollercoaster: Safe-Haven Fades** USD/JPY peaked at 154.48 (Feb-13 high) on haven demand but crashed 0.68% Thursday to 152.83, ending the week down 0.4% at 153.40. Analysts note dollar’s rebound faltered post-labor data, leaving 153 as fragile support.

**Pound’s V-Shaped Recovery** GBP/USD hit 1.3009 (April-14 low) Tuesday but rallied 0.1% weekly to 1.3158. The BoE’s 5-4 vote to hold at 4.0% balanced high inflation and weak labor data. RBC’s Neil Mehta expects December easing focus, while SocGen’s Kit Juckes warns of tough fiscal choices ahead.

**Aussie, Kiwi Slammed** NZD led losses, down 1.73% to 0.5625 (April-9 low) on weak domestic jobs and RBNZ cut bets. AUD fell 0.78% weekly to 0.6494, capped by 0.65 resistance. ANZ’s David Croy sees improving sentiment, while CBA turned bullish on narrowing rate spreads and commodity support.

**Outlook: Dollar Weakness to Persist** With nonfarm delays, shutdowns, and global growth alarms, the dollar’s haven appeal faded. Barclays sees a 60% chance the shutdown ends Nov 11-21, but net shorts and easing bets may prolong dollar weakness. Investors brace for labor/inflation cues as storm clouds gather over the global economy.