EUR/USD Remains Depressed Near April Lows as US Dollar Strengthens and Debt Ceiling Optimism Prevails
The EUR/USD pair continues its downward trajectory for the third consecutive day on Thursday, staying close to its lowest level since early April reached in the previous session. The US Dollar (USD) remains strong near a two-month high, exerting downward pressure on the major currency pair. Recent hawkish comments from various Federal Reserve (Fed) officials have pushed back against market expectations of potential interest rate cuts later this year. This, coupled with optimism surrounding the US debt ceiling being raised, supports higher US Treasury bond yields and reinforces the strength of the USD.
US President Joe Biden and top congressional Republican Kevin McCarthy have emphasized their commitment to reaching a deal soon to raise the government's $31.4 trillion debt ceiling. This has alleviated concerns of a potential American debt default and has boosted investor confidence, resulting in a generally positive sentiment in equity markets. Consequently, traders are exercising caution in placing aggressive bullish bets on the safe-haven US Dollar. Additionally, expectations of further interest rate hikes by the European Central Bank (ECB) could potentially limit losses for the EUR/USD pair.
ECB President Christine Lagarde has reiterated that efforts to control persistently high inflation are ongoing, suggesting that there are factors that could pose significant upside risks to the inflation outlook. This reinforces the belief that more interest rate increases are yet to come, warranting caution before positioning for further depreciation of the EUR/USD pair. Market participants will closely monitor the US economic calendar, particularly the release of Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and the Philly Fed Manufacturing Index, for further guidance.
Furthermore, speeches by influential members of the Federal Open Market Committee (FOMC) will be closely watched as they, along with US bond yields, will influence USD demand and provide impetus for the EUR/USD pair. Additionally, developments surrounding the US debt-limit negotiations and overall market sentiment will contribute to short-term trading opportunities within the major currency pair.
The EUR/USD pair continues its downward trajectory for the third consecutive day on Thursday, staying close to its lowest level since early April reached in the previous session. The US Dollar (USD) remains strong near a two-month high, exerting downward pressure on the major currency pair. Recent hawkish comments from various Federal Reserve (Fed) officials have pushed back against market expectations of potential interest rate cuts later this year. This, coupled with optimism surrounding the US debt ceiling being raised, supports higher US Treasury bond yields and reinforces the strength of the USD.
US President Joe Biden and top congressional Republican Kevin McCarthy have emphasized their commitment to reaching a deal soon to raise the government's $31.4 trillion debt ceiling. This has alleviated concerns of a potential American debt default and has boosted investor confidence, resulting in a generally positive sentiment in equity markets. Consequently, traders are exercising caution in placing aggressive bullish bets on the safe-haven US Dollar. Additionally, expectations of further interest rate hikes by the European Central Bank (ECB) could potentially limit losses for the EUR/USD pair.
ECB President Christine Lagarde has reiterated that efforts to control persistently high inflation are ongoing, suggesting that there are factors that could pose significant upside risks to the inflation outlook. This reinforces the belief that more interest rate increases are yet to come, warranting caution before positioning for further depreciation of the EUR/USD pair. Market participants will closely monitor the US economic calendar, particularly the release of Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and the Philly Fed Manufacturing Index, for further guidance.
Furthermore, speeches by influential members of the Federal Open Market Committee (FOMC) will be closely watched as they, along with US bond yields, will influence USD demand and provide impetus for the EUR/USD pair. Additionally, developments surrounding the US debt-limit negotiations and overall market sentiment will contribute to short-term trading opportunities within the major currency pair.
Trade closed: target reached:
Trade closed: target reached:
