Government Shutdown Pressures the Dollar, Indicators Show Further Downside Risk for USD

According to Golden Ten Data, as the U.S. government enters a shutdown for the first time in nearly seven years, the U.S. dollar is experiencing its longest consecutive decline in a month. Risk reversal indicators in the options market show that the dollar faces further downside risk over the next month.

Mohit Kumar, Chief European Strategist at Jefferies, stated that he expects the weakness of the dollar to persist, noting that the foreign exchange market is one where they "would not expect a reversal of the current trend." The report indicates that the duration of the government shutdown will be a key factor—the longer the shutdown lasts, the greater the pressure on the dollar.