USD Weakens on Shutdown Fears: EUR/USD, USD/JPY Under Pressure

The US Dollar Index has declined 0.4% as government shutdown concerns and slowing economic data weigh on the greenback. EUR/USD advanced 0.35% to 1.0845, while USD/JPY fell 0.6% to 149.20, marking the yen's strongest level in two weeks. The potential government shutdown, if Congress fails to reach a budget agreement by Friday, could disrupt economic data releases and dampen growth prospects. Additionally, recent US economic indicators point to a slowdown, with manufacturing PMI remaining in contraction territory at 48.5. USD/CHF dropped 0.3% to 0.8420, while EUR/CHF held steady near 0.9135. Technical analysis shows the dollar index breaking below the 103.50 support level, potentially opening the path to 102.80. Traders are increasingly pricing in a more dovish Fed stance, with rate cut expectations for early 2025 rising to 65% probability.