Strategic FX Weekly Outlook: Dollar Dominance Faces First Test of November

The dollar begins November in firm control, holding near three-month highs as investors brace for a week defined more by anticipation than action. With the U.S. government shutdown delaying official data releases, traders are turning to private surveys and PMI readings for a steer on growth momentum and whether the Federal Reserve’s cautious tone can sustain the dollar’s run. 

Despite thinner liquidity in Asia due to Japan’s holiday start, market structure remains tight and directional conviction limited. Dollar strength continues to lean on stable yields and a persistent rate differential advantage, even as the Fed’s September cut is increasingly viewed as a one-and-done move for the year. Most major currencies are treading water, waiting for either a surprise in U.S. data or a shift in tone from key central banks later in the week. 
 

The economic calendar is heavy with potential catalysts: ISM manufacturing data, the ADP employment report, and a string of Fed speakers will guide sentiment in the absence of Friday’s nonfarm payrolls. Meanwhile, the Reserve Bank of Australia and the Bank of England both meet this week, with neither expected to alter rates, but their guidance will matter. 

Markets have largely priced out a December Fed cut, now assigning roughly a two-thirds probability to any further move this year. Yet under the surface, risk appetite remains fragile. Political noise in the U.K. and France, softer demand in Asia, and whispers of intervention in Japan all highlight how divergent global policy still is. For now, the dollar sits in the eye of that divergence it is stable, but increasingly vulnerable to its own success. 
 

The pair trades near 1.1515, brushing a three-month low as the dollar’s strength continues to suppress short-term rebounds. Yet beneath the surface, momentum indicators hint at fatigue in the move. RSI readings sit in the low 30s, and daily candles are compressing, a sign that sellers are becoming less aggressive. 

Fundamentally, the eurozone story remains one of gradual stabilisation. PMI data from Germany and Italy is no longer deteriorating, and the ECB’s latest commentary suggests confidence that growth has stopped weakening, even if it hasn’t yet improved. The real challenge for EUR/USD this week will be whether U.S. data reinforces the “higher for longer” story or reveals the first real cracks in the Fed’s confidence. 

If the ISM and ADP numbers disappoint, the euro could find enough oxygen for a rebound toward the 1.1580-1.1620 zone. A sustained move above there would start to unwind oversold technicals and re-anchor the pair closer to its 20-day average around 1.16. For now, the bias remains cautiously constructive on dips, with downside momentum fading. 
 

Sterling remains under pressure ahead of Thursday’s Bank of England meeting, weighed by both domestic politics and investor nerves over November’s fiscal outlook. Technical structure remains bearish, with both the 50- and 200-day moving averages trending lower, yet short-term exhaustion is building. 

This is familiar ground for sterling. Historically, the pound tends to soften heading into U.K. budget announcements as fiscal fears dominate the narrative, before stabilising once the uncertainty passes. The upcoming budget on 26 November looms large, with expectations of higher taxes and spending restraint. Our comprehensive Budget preview explores the potential measures in detail. That mix implies slower growth and a faster disinflation path, both of which argue for additional BoE easing in 2025. 

Yet that repricing is largely complete. Money markets now discount a realistic degree of rate cuts, accelerated by recent softer inflation data that opened the door to BoE cuts, meaning new downside catalysts are scarce unless the BoE turns unexpectedly dovish. Governor Bailey is likely to emphasise patience, data dependence, and limited scope for further cuts without clearer inflation progress. In that context, sterling’s oversold positioning looks increasingly stretched. 

A measured recovery toward 1.33 is plausible for the pair if the BoE avoids spooking markets and U.S. data underwhelms. The next two weeks may prove a transitional phase, from selling pressure to consolidation, before the budget becomes the next defining event