The Greenback faces challenges as traders adopt caution after the United States (US) government shutdown puts thousands of federal jobs at risk. The labor market weakness boosts bets on further Federal Reserve (Fed) rate cuts. The CME FedWatch Tool suggests that markets are now pricing in a 99% chance of a Fed rate cut in October and an 87% possibility of another reduction in December. Dallas Fed President Lorie Logan said late Tuesday that she “plans to exercise caution in further reductions,” as anchored inflation expectations cannot be taken for granted. Logan added that, excluding tariff impacts, inflation may rise to 2.4%, driven by non-housing services.