Government Shutdown Dominates: Dollar Weakens, Gold Soars to $3,890

Market Sentiment Overview

The US federal government shutdown entered its third day, creating unprecedented uncertainty across financial markets. The Dollar plunged to three-week lows near 97.50 as investors fled USD assets amid data blackouts and political gridlock. Gold surged to record highs near $3,900 on safe-haven demand, while equity markets showed surprising resilience with Bitcoin rallying 7% on “Uptober” momentum. The shutdown has delayed critical economic releases, including NFP data, forcing markets to navigate blindly through Fed policy uncertainty.

Currencies

USD Index: Shutdown Pressures Dollar to Multi-Week Lows (97.33)

Current Trend: Bearish Market Sentiment: Very Negative

The US Dollar Index fell to 97.33, marking its fourth consecutive monthly decline and down nearly 10% since the tariff-driven peaks in February. The USDX faces immediate resistance at 98.18 and 99.00, with support established at 96.60 and at a deeper level at 95.81. The government shutdown has created a data vacuum, with the Bureau of Labor Statistics unable to release September NFP and other key reports. The Trump administration announced $26 billion in frozen funds for Democratic states and signaled potential layoffs of “thousands” of federal workers. Markets are pricing 45 basis points of Fed easing by year-end despite the uncertainty. A break below 96.60 support could trigger algorithmic selling toward the 95.81 level, while any political resolution might spark a relief rally toward 98.18.

EUR/USD: Range-Bound Amid ECB Caution (1.1741)

Current Trend: Consolidative Market Sentiment: Neutral

EUR/USD trades at 1.1741, benefiting from Dollar weakness but remaining trapped in a consolidation pattern. The pair faces resistance at 1.1827 and a stronger barrier at 1.1935, while support holds at 1.1649 with deeper protection at 1.1533. Eurozone inflation rose to 2.2% in September as expected, with core holding steady at 2.3%. German 10-year Bund yields broke below 2.70% to two-week lows. ECB President Lagarde stated inflation risks are “quite contained,” suggesting the bank is comfortable pausing further rate cuts. CFTC data shows net longs falling to 114.3K contracts, the lowest since July, indicating waning bullish conviction. A break above 1.1827 could target the 1.1935 level, while failure to hold 1.1649 may trigger a retest of 1.1533.

GBP/USD: Recovery Stalls Below Key Resistance (1.3479)

Current Trend: Bullish (Correcting) Market Sentiment: Cautious

GBP/USD trades at 1.3479, staging a recovery from seven-week lows at 1.3330 but failing to sustain momentum above the 1.3500 level. The pair now faces resistance at 1.3582 and 1.3650, with support at 1.3391 and deeper at 1.3324. The Pound benefited from cautious BoE commentary and US Dollar weakness, posting its first weekly gain in three weeks. UK economic data remained supportive with Q2 GDP acceleration, though fiscal concerns persist as the government faces difficult budget choices ahead. The confluence of moving averages near 1.3500 continues to act as a technical barrier. A break above 1.3582 could open the path toward 1.3650, while failure to hold 1.3391 may trigger a retest of the 1.3324 support zone.

Commodities

Gold: Record Highs Near $3,887 on Shutdown Fears (3,886.76)

Current Trend: Strongly Bullish Market Sentiment: Very Positive

Gold trades at $3,886.76, consolidating just below its all-time high near $3,900 as safe-haven flows intensify amid the US government shutdown. The precious metal faces immediate resistance at $3,931.20, with the psychological $4,000 level and technical target at $4,000.84 looming above. Support is established at $3,817.40, with deeper protection at $3,751.16. Technical indicators show overbought conditions with RSI well above 70, yet the shutdown’s unpredictable duration continues to attract buyers. The metal capitalized on Dollar weakness, mixed US yields, and growing concerns about US debt sustainability. Historical data suggests government shutdowns typically provide short-term support for gold, with strength holding for a couple of months during longer shutdowns. A break above $3,931.20 could trigger a run toward the $4,000 psychological barrier.

WTI Crude Oil: Sharp Reversal Higher Despite Bearish Fundamentals (65.09)

Current Trend: Volatile/Mixed Market Sentiment: Uncertain

WTI crude shows surprising strength at $65.09 despite bearish fundamentals, recovering from earlier weekly lows near $60.88. The commodity faces resistance at $62.99 (now support-turned-resistance) and $64.80, with critical support at $58.04 and deeper at $56.21. The sharp reversal comes despite OPEC+ debates over adding 411,000 bpd in November and Iraq’s resumption of northern pipeline exports (200,000 bpd initially, targeting 1.5M bpd). US crude inventories fell 2.8 million barrels to 416.5 million, though demand-side worries persist with China’s manufacturing PMI at 49.5 and the Eurozone PMI at 49.5. The current price action suggests short-covering or technical buying, but analysts warn fundamentals remain bearish. A failure to hold $62.99 could trigger renewed selling toward $58.04, while a sustained break above $64.80 might signal a short-term bottom.

Stocks

Tech Giants Show Resilience Despite Shutdown

Current Trend: Mixed Market Sentiment: Cautiously Positive

Meta (#FB) trades at $710.43, with resistance at $731.23 and $746.96, while support sits at $693.28 and $675.70. The stock maintains strong fundamentals with Q2 revenue surging 22% to $47.52 billion and operating margins at 43%. AI-driven ad targeting improvements increased conversion efficiency by 5% on Instagram. The company’s $100 billion CapEx guidance for 2026 signals aggressive AI infrastructure investment. Despite recent consolidation, the stock remains well-supported above the $693 level, with a break above $731.23 potentially targeting the $746.96 resistance.

Intel (#INTC) trades at $36.80, facing resistance at $38.27 and $40.80, with support at $35.45 and deeper at $32.92. The stock has surged 83% YTD, fueled by $16 billion US government stake and $5 billion Nvidia partnership. Despite the first negative EBIT in 30 years (-$2.72B), political backing and potential AMD foundry partnership have created speculative momentum. RSI above 77 indicates overbought conditions, suggesting the stock needs consolidation. Immediate support at $35.45 is critical to maintain the bullish structure, while a break above $38.27 could target the $40.80 level.

Crypto

Bitcoin: Breaking to New Highs on “Uptober” Momentum (122,316)

Current Trend: Strongly Bullish Market Sentiment: Very Positive

Bitcoin surged to $122,316, breaking above its previous consolidation and approaching the all-time high of $124,474. The cryptocurrency faces resistance at $126,635.53 and $130,325.27, with support at $117,553.09 and deeper at $113,976.89. Institutional demand surged with $2.25 billion in spot ETF inflows, while corporate buyers like Metaplanet and Strategy added significant BTC to reserves. The “Uptober” narrative gained strong traction, with Bitcoin historically delivering 20.62% average returns in October. Fed rate cut expectations (97% probability for October 29) and declining exchange reserves (lowest since 2018) support continued upside. A daily close above the ATH at $124,474 could trigger price discovery mode toward the $126,635-$130,325 zone. The 141.40% Fibonacci extension targets $145,159 in an extended rally scenario.

Key Events This Week (Oct 6-10, 2025)

Critical Political Developments

Ongoing: US Government Shutdown – No resolution in sight as Republicans and Democrats remain deadlocked
Data Blackout: NFP, BLS, Census Bureau reports indefinitely postponed
Wednesday: FOMC Minutes from September meeting (key focus amid data vacuum)
Friday: University of Michigan Consumer Sentiment (preliminary)

Economic Releases

Monday: Eurozone Sentix Index, Czech Republic preliminary CPI
Tuesday: Germany Factory Orders, UK Halifax House Prices, Canada Trade Data
Wednesday: RBNZ Interest Rate Decision (expected cut to 2.75% from 3.00%), Germany Industrial Production
Thursday: ECB Accounts, Weekly US Initial Jobless Claims (if published)
Friday: Germany Industrial Output, Canada Employment Data

Central Bank Speakers

Monday: ECB’s Lagarde, De Guindos, Lane; BoE’s Bailey
Tuesday: BoE’s Mann
Wednesday: Fed’s Musalem, Barr, Kashkari; ECB’s Buch, Elderson; BoE’s Pill
Thursday: Fed Chair Powell (key speech), Fed’s Bowman, Barr
Friday: Fed’s Goolsbee, Musalem; RBA’s Bullock, Kent

Week Ahead Outlook

The US government shutdown dominates all market narratives, creating a unique environment where political developments matter more than traditional economic data. The prolonged closure threatens to delay Q4 GDP by 0.3% according to Treasury Secretary Bessent, while potential federal layoffs could impact employment figures once data resumes.

Wednesday’s FOMC Minutes will be scrutinized for clues on how the Fed might navigate policy decisions without access to current economic data. Markets currently price in two 25bps cuts before year-end (October and December meetings), but the shutdown adds unprecedented uncertainty to this trajectory.

Gold’s technical setup suggests consolidation near $3,900 before the next breakout, with political resolution or escalation serving as the primary catalyst. Oil faces a critical OPEC+ decision on Sunday, with any output increase above 500,000 bpd likely sending WTI below $59.

Currency markets will focus on ECB communications for EUR direction and Fed speakers for Dollar cues, though the data blackout limits conviction. Bitcoin’s “Uptober” momentum remains strong, supported by institutional flows and favorable macroeconomic conditions despite the political chaos.

Risk Management Critical: The unprecedented nature of the shutdown during a data-dependent Fed policy cycle creates elevated volatility across all asset classes. Traders should reduce position sizes and widen stop-losses until political clarity emerges or government funding is restored.