Core Viewpoint - The upward momentum of the US dollar in the near term is primarily driven by "political turmoil" in non-US developed economies, while the downward pressure stems from the "economic weakness" within the US. Overall, the dollar's rebound lacks sustainability, indicating a potential end to its strength and a shift towards a period of range-bound fluctuations [2][13]. Summary by Sections Dollar Index Performance - The dollar index, which had been weak in the first half of the year, recently surpassed the 100 mark for the first time in five and a half months. This rebound is attributed to ongoing political turmoil in France and strengthened by Japan's political developments, culminating in a hawkish stance from the Federal Open Market Committee (FOMC) in October [4][6]. US Economic Context - The US economy faces increased downward pressure amid the longest government shutdown in history, complicating the validation of economic perspectives due to a lack of official data. The shutdown has created a "tightening effect" by pausing non-essential government spending, which is expected to worsen conditions for lower-income Americans [6][13]. Non-US Economic Factors - The Japanese yen's recent depreciation reflects market concerns regarding the Bank of Japan's delayed interest rate hikes and the disconnect between GDP growth and stagnant wage growth. The potential for further yen weakness may limit the dollar's upward momentum, while the UK's tax increase plans could introduce new external variables affecting the dollar [9][11][13]. UK Economic Developments - UK Chancellor Rachel Reeves' recent public support for tax increases and spending cuts has raised concerns about fiscal tightening's impact on economic growth. This shift in fiscal policy expectations has increased the likelihood of interest rate cuts by the Bank of England, potentially driving the dollar index higher [13]. Future Outlook - The dollar's trajectory will largely depend on internal US factors, including the potential for government reopening, mid-term monetary policy adjustments, and long-term fiscal deficits. The evolution of the AI bubble will also play a crucial role in shaping the dollar's future [13].