Insights 
VT 
Recent Labour Market Trends
The US Dollar’s recent surge did not surpass the 200-day moving average, and it settled at 99.80 levels. Analysts from OCBC observe that bullish momentum on the daily chart has diminished, with the Relative Strength Index (RSI) also decreasing.
Current USD support levels are noted at 99.80, 99.10, and 98.40, while resistance is at 100.30/60. The lack of decisive data and a divided Federal Reserve provided room for a USD rally earlier in the week. However, a weaker US Dollar is expected if US data reveals further softening and the Federal Reserve cuts rates further.
Recent data indicates a softening US labour market, with private sector job creation slowing and layoffs increasing. A particular report showed job cuts rose 183% from September to October, reaching 153,000. Year-to-date, 1.1 million job cuts have been announced, marking the highest figure since the COVID-19 pandemic began in 2020.
Moreover, Indeed job postings and wage growth tracker have decreased throughout the year. Expectations suggest a softer USD alongside ongoing Fed rate cuts, contingent on broader risk sentiment and external growth conditions. Concurrently, the US government faces its longest shutdown, lasting over 36 days.
The US Dollar’s recent run-up appears to be over after it failed to break through its 200-day moving average. With momentum fading, we see the Dollar Index (DXY) poised for a moderate decline from its current 99.80 level. Key support levels to watch are 99.10 and then 98.40 in the coming weeks.
This view is reinforced by this morning’s Non-Farm Payrolls report for October 2025, which showed the US economy added only 110,000 jobs, missing forecasts of 180,000 and confirming the softening labor market trends. This follows the Challenger, Gray & Christmas report which noted job cuts have hit their highest level since the COVID pandemic in 2020. This data gives us more conviction that the Federal Reserve will continue its easing cycle.
Positioning for Further Dollar Weakness
With the Fed having already cut rates by 25 basis points at its meeting last week and with core inflation trending down to 2.8%, further cuts are priced in for early 2026. Looking back at the extended government shutdown of 2018-2019, the DXY saw a period of choppy, sideways trading before ultimately weakening, a pattern that could repeat itself now. The current shutdown, already the longest on record, only adds to this bearish outlook for the dollar.
For derivatives traders, this points toward positioning for further dollar weakness. We should consider buying put options on the UUP, the dollar index ETF, targeting strike prices below the current level for expiration in late December 2025 or January 2026. Given that recent data surprises have pushed up volatility, using put debit spreads could be a cost-effective way to express this bearish view.
This strategy can be extended to currency pairs, particularly by buying call options on EUR/USD futures. The euro has shown relative strength, and as long as risk sentiment holds up, the pair could test the 1.1550 level mentioned as a resistance point. The outlook for the British Pound is less clear due to the Bank of England’s own weak demand forecast, suggesting a more cautious approach like a bull call spread on GBP/USD might be prudent.
The prolonged government shutdown and weak economic signals are creating broader market uncertainty, which we see reflected in the VIX holding above 20. Traders should consider using VIX call options as a portfolio hedge against any sudden risk-off events that could be triggered by political gridlock or a sharper-than-expected economic slowdown. This environment also supports the strength we’ve seen in safe-haven assets like gold, which is currently holding above $4,000 an ounce.
