[MARKET ANALYSIS] DXY marginally softened amid a partial government shutdown and ahead of an event-packed week

DXY: -0.1%

• Marginally softened in rangebound trade with demand constrained amid the partial US government shutdown, which is not expected to last long after the US Senate voted 71-29 to pass the USD 1.2tln government funding deal on Friday, and with the House expected to vote as soon as today on the plan. Participants also lack conviction heading into an event-packed week, which includes several central bank rate decisions, the latest BLS jobs report and a Japanese snap election.

EUR/USD: +0.2%

• Mildly gained but remains beneath the 1.1900 handle amid a lack of pertinent catalysts to spur the single currency and with the ECB expected to maintain policy settings at its meeting later in the week.

GBP/USD: +0.1%

• Eked slight gains to retest the 1.3700 level to the upside in otherwise uneventful FX trade with the BoE also expected to stand pat at its meeting on Thursday after having just cut rates at the last meeting in December through a sharply divided vote split.

USD/JPY: +0.2%

• Climbed higher following comments from Japanese PM Takaichi on Saturday in which she seemingly lauded the effects of yen weakness, although she attempted to clarify the following day that her remarks were not intended to stress the advantages of a weaker currency.

Antipodeans: AUD/USD -0.2% / NZD/USD Flat

• Antipodeans lack demand following the disappointing official Chinese PMI data over the weekend and amid the mostly downbeat risk appetite, while the RBA also begins its 2-day policy meeting, where the central bank is expected to hike rates for the first time in over two years.

The DXY's marginal decline reflects concerns from the ongoing partial U.S. government shutdown, though a resolution seems likely given the Senate's bipartisan funding approval. This uncertainty is compounded by an event-packed week featuring multiple central bank meetings, heightening the focus on policy decisions and economic data that could shape forex markets across major pairs, notably with potential implications for the Euro and the Pound as they also navigate their own central bank meetings.