USD: Shutdown stalls momentum
The dollar has stumbled out of the blocks this month. With the government shutdown threatening to delay the release of non-farm payrolls, the upward momentum generated by last week’s stronger GDP revision has already lost steam.

The ADP report showed private payrolls falling by 32,000 in September, though much of that was attributed to quirks in data analysis. Manufacturing activity remains subdued too – September marked the seventh straight month of contraction. The ISM headline index edged up from 48.7 to 49.1, but the new orders component slipped back into contraction at 48.9. The dollar dipped on the release, but not dramatically, reflecting the limited weight of these “second-tier” indicators when the main event – NFP – looks set to be postponed.

With top-tier data unlikely this week, the greenback may stay muted, hemmed in by shutdown-related uncertainty and a softer macro backdrop, until the next run of meaningful economic releases arrives.

EUR: Breakout delayed, patience tested
Eurozone inflation landed broadly as expected, capping off the latest run of national prints and reinforcing a picture of contained price pressures. The timing was notable, coming just after ECB President Lagarde flagged scope for further rate cuts, emphasising that policy remains flexible rather than fixed.

The euro is holding up against the dollar thanks to US political noise, but the same deadlock is limiting its ability to break higher. Without clarity on the US outlook – particularly the labour market – EUR/USD lacks the conviction to push beyond $1.18.

The pair has repeatedly failed to clear a descending trendline over recent months, and the latest stall feels like more of the same. A decisive move higher would require either a run of softer US data or a clearer dovish tilt from the Fed. Until then, the risk is that momentum fades, leaving the euro vulnerable to another pullback.

GBP: Political clouds clear, but upside capped
Sterling kicked off Q4 on strong footing, with markets relieved that the Labour Party conference avoided any big swing toward fiscal largesse. That cleared away a key political risk that had been hanging over the pound.

With month-end flows now out of the way, the focus has shifted to broader market drivers. The FTSE 100 continues to benefit from the global equity rally, reaching record-high valuations and adding an element of domestic support for sterling.

GBP/EUR briefly touched €1.15 before slipping back to €1.1480 by Thursday morning, while GBP/USD followed a similar pattern, peaking at $1.3527 before retreating to $1.3475. Similar intraday reversals across the majors suggest fading strength rather than a clean trend higher.

Sterling did finish the session stronger, but the failure to hold highs hints at limited follow-through. Still, technicals look healthier than they did at the start of the week, with signs of a more solid base forming. That said, moving averages overhead are likely to act as resistance – with the 21-day SMA at €1.15 the first key barrier for GBP/EUR.