The Dollar Index posted a slight rebound, closing at 98.91 after a 0.06% decrease. President Donald Trump rejected a request from Democratic congressional leaders for a meeting on Tuesday, stating that it would only take place once the government shutdown ends. This impasse complicates the Federal Reserve’s tasks at its upcoming meeting on October 29.
A Reuters survey of economists anticipates that the Fed will lower key interest rates by 25 basis points next week and will likely cut again in December. However, there remains considerable disagreement among economists regarding the direction of rates by the end of next year.
Finance Minister sues Koizumi, a proponent of loose fiscal and monetary policy, indicated on Tuesday that the specific measures of monetary policy will be determined by the Bank of Japan. New Finance Minister Takayama Kazuki stated on Wednesday that the government and the Bank of Japan need to coordinate to ensure effective economic and monetary policies.
The Bank of England recently began to signal a more hawkish stance, holding a view that differs from the general market opinion, suggesting inflation could be stronger than expected by markets or economists. However, this prediction does not appear to have materialized; investors now assign a 75% probability of a rate cut by the Bank of England before the end of the year, an increase from around 46% prior to data releases.
Based on this analysis, recent views from the financial community remain unchanged: the Dollar Index is experiencing a weak rebound. Investors expect the new Japanese government to implement expansionary fiscal policy, and tensions with the Bank of Japan are likely to weigh on the yen, which has declined by 2.5% this month—marking its largest monthly decline since July. Both the pound and yen are noteworthy.
Dollar Index: The Dollar Index has pulled back from its earlier high of 110.18, now running below the 250-day moving average (MA250). After reaching a low of 96.37, it has maintained low-level fluctuations, exhibiting a clear bearish trend. The short-term outlook suggests a bearish and fluctuating decline.
EUR/USD: The euro has begun a rebound from the previous low of 1.0177, demonstrating a steady upward trend. Currently, the euro against the dollar is operating above the MA250, showing a clear bullish trend. The short-term outlook suggests a bullish movement with continued gains.
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