USD/Major pairs face reversal risk as US shutdown nears resolution

The US dollar's October rally faces a critical juncture as Credit Agricole analysts warn that a resolution to the US government shutdown could trigger a reversal across major USD pairs. The dollar index (DXY) has gained approximately 2.8% since early October, driven by safe-haven flows and fiscal uncertainty. However, with shutdown negotiations progressing, risk-on sentiment could return to markets, potentially weakening the greenback against major counterparts. EUR/USD currently trades near 1.0600, having declined from October highs, while GBP/USD hovers around 1.2700. USD/JPY has pushed above 150.00, benefiting from the dollar's strength. Credit Agricole suggests that a shutdown resolution would remove a key dollar support, potentially triggering profit-taking on long USD positions. Traders should monitor Congressional developments closely, as any breakthrough could see rapid USD selling across the board, with EUR/USD targeting 1.0750 and GBP/USD eyeing 1.2850 on the upside.