EURUSD weekly prediction – recovery Depends on Debt Ceiling accord. US Debt ceiling, euro Zone CPI, and NFP Jobs Numbers to take the lead.
EURUSD had an uneventful last week
The EURUSD did not have its best week with losses versus the US dollar persisted. While gains and losses against the British sterling alternated. However, pair continued to be the duo of attraction, with its fourth straight weekly of losses vs the dollar.
For the most of the week, (ECB) officials kept up their aggressive language. While unable to provide the single currency with any meaningful assistance. The result may be due to the markets’ perception of the ECB being the most pessimistic central bank going forward. Markets seem to have largely factored in the recent aggressive tone of ECB officials, and a big shift is needed for bulls to reappear.
The Debt Ceiling Deadline Changed
As we approach the start of the new week, a solution on the US debt ceiling seems unclear. Supporting the dollar’s surge. However, US Treasury Janet Yellen changed the deadline from June 1 to June 5. Stating that without raising the debt ceiling, the US may default as soon as June 5. Over $130 billion in planned payouts from the Treasury will be made in the initial 2 days of June Covering payouts to veterans, Social Security recipients, and Medicare beneficiaries. The revised deadline does give mediators additional time to negotiate, but the greater volatility we can see in the markets the longer this drags on.
Better-than-expected US PCE statistics on Friday provided a further boost for the US greenback. As the likelihood of a June Fed rate rise was repriced in an aggressive manner. The probability of a 25 bps Fed rate rise in June is currently priced in by the markets at 71%, a rise from 17% a week earlier.
Source: CME FedWatch Tool
US DEBT CEILING, NFP, & EURO CPI
We will have certain Euro Zone statistics going towards the new week, notably the flash CPI report being especially significant. Nevertheless, despite the fact that the CPI release surprises. We do not anticipate any significant changes to the forecast for the euro.
The story around the US dollar’s debt ceiling is expected to take center stage this coming week once more. This will be combined with Friday’s NFP a job report. Which is certainly important in light of the positive PCE statistics. Yet, if an agreement is reached on the debt ceiling, the dollar could maintain its longer-term slide since high in September 2022.
Economic Activity Schedule for Coming Week
Technical Perspective
Source: TradingView
On the EURUSD weekly graph aforementioned, one observe that the price has fallen to a crucial support level. Before the EURUSD surged to its YTD top, the last breakthrough took place in early March at the 1.0700 area.
When we look at a daily timescale, we observe that uncertainty has already started at the 1.0700 mark. The daily candle on Friday closed as a doji, suggesting that the coming week ahead may see some gains. Naturally, Monday is a bank holiday, and, absent any shocks about a debt ceiling resolution, volume and volatility are likely to be minimal.
