Global FX and bond markets stayed jumpy on Tuesday as traders digested fresh signs of division inside the U.S. Federal Reserve. With key economic data only now resuming after the long government shutdown, policymakers are split over how quickly to pivot from holding rates steady to cutting them in 2026.

Some officials warn that inflation progress could stall if financial conditions ease too soon, while others point to softer hiring and cooling wage growth as reasons to start planning the next cut. That tug of war has kept U.S. yields chopping around in a wide range and left the dollar index hovering off its recent highs rather than breaking decisively in either direction.

Why this matters for FX traders
Uncertainty over the Fed path keeps major pairs trapped in choppy ranges. EUR/USD has bounced off its October lows but still struggles to clear resistance, USD/JPY is holding near historically elevated levels, and high-beta currencies such as AUD and NZD continue to trade like barometers of global risk appetite. Options pricing shows rising demand for volatility hedges into the next batch of U.S. data and the release of the Fed minutes.

What to watch next
Traders are now laser‑focused on incoming figures for jobs, inflation and consumer spending, which could break the stalemate on the policy outlook. A run of stronger‑than‑expected data would likely revive talk that the Fed will cut later and less, supporting the dollar and weighing on risk currencies. Softer numbers, by contrast, could pull yields and the dollar lower, giving the euro, yen and Swiss franc room to extend their recent recoveries.