The U.S. 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 the lasting effects of the historic U.S. 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 argue that the yen’s recent slide could push the Bank of Japan toward a rate increase as early as next month. Even so, market pricing hasn’t caught up with that view—futures point to only a 24% chance of a quarter-point move in December.

Developments in Europe and Beyond

Across the Atlantic, the British pound inched up 0.47% to $1.3192. The rise came even as fresh numbers showed that UK growth stalled in the third quarter, partly because of a major cyberattack in September. Investors still interpreted the data as a sign that the economy has some underlying resilience.

Australia’s dollar briefly touched a two-week high after unemployment eased from a four-year peak, lowering expectations that the Reserve Bank of Australia would move quickly toward more rate cuts. The momentum didn’t hold, though, and the currency eventually slipped 0.12% to $0.653 against the U.S. dollar.

Meanwhile, in Europe, policymakers continue weighing whether they should build a backup to the Federal Reserve’s dollar-funding network—a shared pool of dollar reserves held by non-U.S. central banks that would reduce dependence on Washington during the Trump administration.

A Volatile Outlook for the Dollar

As markets digest shifting signals, investors are waiting for clearer direction from the Fed and the White House. The reopening of the government has helped settle nerves in the short term, but skepticism about Washington’s fiscal stability remains.

Crypto trading mirrored that caution. Bitcoin dropped 3.07% to $98,752 as investors gravitated toward safer ground in response to shaky exchange-rate movements.

Overall, the dollar’s retreat highlights a global pause as traders try to map out U.S. policy. With important inflation data, central-bank meetings, and political developments approaching, more volatility seems likely.