The US dollar fell on Thursday after the government reopened, marking the end of the nation’s longest shutdown in history. Traders shifted focus to the broader economic impact, raising questions about how much trust global markets still have in the greenback. With delayed data reports and investor uncertainty, the reopening brought both relief and anxiety.

Lingering Concerns After the Shutdown

The month-long shutdown disrupted essential services and left more than a million federal workers without pay. It also slowed air traffic, halted food aid programs, and rattled consumer confidence. While the government’s return offered short-term stability, analysts warned that the damage could linger.

Freepik | Markets stay cautious as investors weigh lasting effects of the historic US government shutdown.

Juan Perez, director of trading at Monex USA in Washington, noted that investors now face a challenge in assessing accurate economic conditions.  “The shutdown is over, but how soon are we going to get trusted numbers again?” he said.

The delay in key data releases has made it harder for markets to predict future trends or assess growth.

Data Gaps Add to Economic Uncertainty

White House economic adviser Kevin Hassett confirmed that the government would release the October employment report soon. However, he added that the unemployment rate would remain unavailable because household surveys did not take place during the shutdown. This partial release leaves analysts with limited insight into the job market’s true condition.

The uncertainty arrives at a crucial time. Investors are eager to gauge how the Federal Reserve might respond to evolving conditions. Yet, with gaps in data and shifting signals, predicting policy moves has become increasingly complicated.

Federal Reserve Remains Cautious

Recent months have shown mixed signals from the Federal Reserve. After two interest rate cuts this year, officials remain cautious about additional easing. Inflation fears persist, but a steady labor market keeps the Fed hesitant to act too aggressively.

Fed Chair Jerome Powell recently said that a December rate cut is “not certain,” leaving traders divided. Sarah Ying, head of FX strategy at CIBC Capital Markets, said momentum behind the dollar weakened as confidence in near-term cuts faded.

Some policymakers remain split. San Francisco Fed President Mary Daly stated that the risks to inflation and employment are now balanced. Meanwhile, Minneapolis Fed President Neel Kashkari highlighted that inflation still runs high at around 3%, even as parts of the labor market show weakness.

Diverging Opinions Within the Fed

Cleveland Fed President Beth Hammack pushed for maintaining restrictive interest rates to keep pressure on inflation. On the other hand, St. Louis Fed President Alberto Musalem said rates now sit closer to neutral, suggesting limited room for more tightening without risking growth.

These differing views add confusion to an already tense market. Traders remain unsure whether the next move will bring rate cuts, continued restraint, or policy recalibration in early 2026.

Global Market Response

Freepik | Who is Danny | Global investors adjust positions as the dollar slips and the euro shows new signs of strength.

The dollar index dropped 0.35% to 99.14, while the euro climbed 0.4% to $1.1638, its highest level since late October. The rise pushed the euro above a trend line that had constrained it since September. Investors took this as a sign of renewed strength in European markets.

Against the yen, the dollar weakened 0.22% to 154.43. Earlier in the week, it reached a nine-month high after Japanese Prime Minister Sanae Takaichi signaled her preference for low interest rates. Finance Minister Satsuki Katayama later warned about “one-sided and rapid movements” in the yen’s value as it approached 155 per dollar.

Some analysts believe a weak yen may force the Bank of Japan to raise rates next month. However, traders currently see only a 24% chance of a quarter-point hike in December.

Developments in Europe and Beyond

Across the Atlantic, the British pound rose 0.47% to $1.3192. The gain came despite new data showing sluggish economic growth in the third quarter, partly due to a cyberattack in September. Still, investors saw resilience in the UK economy as a sign of cautious optimism.

In Australia, the local dollar briefly hit a two-week high after official data showed a drop in unemployment from a four-year peak. This reduced pressure on the Reserve Bank of Australia to cut rates again. Yet, those early gains faded later in the session, with the currency ending down 0.12% against the greenback at $0.653.

Meanwhile, European officials continue debating whether to create an alternative to the Federal Reserve’s funding backstop. The proposal would pool dollars held by non-US central banks, reducing reliance on Washington under the Trump administration.

A Volatile Outlook for the Dollar

As markets adjust, investors continue to watch for clear signals from the Federal Reserve and the White House. The government reopening may restore short-term order, but confidence in US fiscal management remains fragile.

Cryptocurrency markets also reflected uncertainty. Bitcoin fell 3.07% to $98,752 as traders moved toward safer assets amid volatile exchange rates.

Overall, the dollar’s dip underscores global hesitation about US policy direction. With new inflation data, central bank meetings, and political shifts ahead, traders expect more turbulence before stability returns.