Is the Dollar Again Fearing Fed Drama & a Shutdown?
The US Dollar Index (DXY) weakened near 97.00 during the Asian session, dropping to its lowest level since September 18, 2025. This weakening occurred as markets assessed the risk of political interference in US monetary policy. The main focus: concerns about the independence of the Federal Reserve after President Donald Trump stated that he would soon announce the next Fed chair candidate to replace Jerome Powell when his term ends in May 2026.
Pressure on the dollar also comes from the risk of a partial US government shutdown. Reuters reported that funding debates, including over the DHS budget, are still heated and could lead to a government shutdown if a funding package is not agreed upon before this weekend's deadline. This kind of uncertainty usually causes market participants to reduce positions in USD assets, fearing increased volatility and further impasse in fiscal decisions.
The market now awaits two important data figures later today: ADP (private sector employment) and Consumer Confidence from the Conference Board (scheduled for release Tuesday, January 27, 10:00 AM ET). After that, attention turns to the Fed's meeting, which is expected to hold interest rates at 3.50%–3.75%. The key to the dollar's movement will be the tone of the press conference: if the Fed sounds more hawkish, USD weakness could be contained; if the Fed sounds more dovish amid political pressure, the dollar could become even more vulnerable. (az)
Source: Newsmaker.id
