Daily Forex News by XtremeMarkets.com

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Edited September 25 by xtrememarkets

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EUR/USD edges higher as US shutdown concerns pressure the Dollar

The EUR/USD pair rose more than 0.20% on Monday, supported by renewed concerns about a potential US government shutdown. Despite improved sentiment data in the Eurozone, the common currency’s advance remained modest. At the time of writing, the pair trades near 1.1726, after touching a daily low of 1.1701.

Dollar weakens amid political deadlock in Washington

The US Dollar slipped against most G10 currencies as political uncertainty in Washington weighed on investor sentiment. President Donald Trump met with Democratic leaders from both the House and Senate, but the discussions revealed deep divisions.

Senate Democratic leader Chuck Schumer said, “We have large differences,” while House Democratic leader Hakeem Jeffries stressed that his party would not support a partisan Republican bill that threatens healthcare. Meanwhile, Vice President J.D. Vance told Bloomberg that the US is heading toward a shutdown following stalled talks.

Fed comments mixed; US housing data supports outlook

Earlier in the session, US housing data surprised to the upside, with Pending Home Sales jumping 4% in August, far above the 0.3% expected, and reversing July’s slight decline.

Federal Reserve officials, however, struck mixed tones:

St. Louis Fed President Alberto Musalem described inflation expectations as “somewhat high,” while noting labor market weakness.

Cleveland Fed President Beth Hammack maintained that inflation remains too high and continues on the wrong path.

New York Fed President John Williams highlighted that policy is restrictive but still effective in easing inflationary pressures, while acknowledging gradual labor market softening.

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GBP/USD Advances Above 1.3450 Amid Rising Fed Rate Cut Expectations

GBP/USD extends its rally for the fourth straight session, trading near 1.3460 during Wednesday’s Asian session. The pair remains supported as the US Dollar (USD) weakens on the back of soft labor market data, which has heightened expectations of Federal Reserve (Fed) rate cuts. According to the CME FedWatch Tool, markets are now pricing in a 97% chance of a rate cut in October and a 76% probability of another reduction in December.

US Job Openings data signaled further cooling in the labor market, with vacancies edging up slightly to 7.23 million in August from 7.21 million, while the hiring rate slipped to 3.2%—its lowest since June 2024. Layoffs, however, remained subdued. Traders now turn their focus to September’s ADP Employment Change and ISM Manufacturing PMI, though releases may be disrupted by the ongoing US government shutdown.

The shutdown, which has left around 750,000 federal employees furloughed, came after Congress failed to pass funding bills. The US Labor Department confirmed that its statistics agency will suspend key data releases, including Friday’s nonfarm payrolls report, if the shutdown continues.

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