Market Drivers – US Session: Dollar Under Pressure as Markets Await US Funding Breakthrough

Global financial markets are holding a risk-on stance as investors anticipate a crucial vote in the US House of Representatives. The expected vote during the overnight session aims to pass a short-term funding solution to re-open the US government. This move is putting continued downward pressure on the US Dollar (USD). Should the short-term funding bill pass successfully, risk appetite is expected to reignite immediately. The focus will then pivot rapidly toward the resumption of official US economic data releases, which investors believe will encourage the Federal Reserve (Fed) to resume cutting interest rates before the end of the year.

A successful stopgap funding bill will trigger a weakening of the US Dollar Index (DXY) as capital flows toward riskier assets. However, this reopening will also begin the process of catching up on numerous delayed datasets, particularly key inflation and labor metrics. The subsequent publication of this data, likely out-of-cycle, promises to inject additional volatility into the markets in the coming weeks.

Looking at major currency pairs, EUR/USD is currently treading water despite a five-day winning streak. Bullish momentum for the Euro (EUR) remains limited, keeping the pair stalled just below the 50-day Exponential Moving Average (EMA) near 1.1625. While a pattern of lower highs restricts upward potential, the 1.1500 handle stands firm as a technical floor. Meanwhile, GBP/USD is struggling, stuck below 1.3200 and testing 1.3100. Cable traders lack a compelling reason to bid up the Pound Sterling (GBP), even amidst the broad weakness of the Greenback, as recent UK economic data has consistently missed expectations. Thursday’s upcoming UK Gross Domestic Product (GDP) growth figures are not anticipated to break this negative trend.

In stark contrast, USD/JPY is showcasing significant strength, testing nine-month highs above 154.00 and on track for a third straight monthly gain. A general improvement in global market sentiment is seeing the safe-haven Japanese Yen (JPY) shed weight against the US Dollar, pushing the Greenback higher following an extended consolidation period earlier in 2025.

Commodity markets are seeing mixed signals. West Texas Intermediate (WTI) Crude Oil prices fell sharply back below $60.00 per barrel on Wednesday, hitting three-week lows near $58.40. Energy traders are bracing for the latest American Petroleum Institute (API) inventory counts, which are expected to confirm an ongoing build-up in US crude stocks. Despite the overall ‘risk-on’ mood, an undercurrent of apprehension persists, keeping Gold (XAU/USD) prices elevated as investors maintain a hedging strategy. Gold toyed with intraday bids above $4,200 per ounce, positioning itself near the 50% retracement level between its last swing low in the $3,900 range and its record high posted near $4,400 in mid-October.