US Dollar strength and debit ceiling impacts on EURUSD pair .As the day of default draws closer, debt ceiling negotiations continues.
The X-Factor and Bipartisan Policy Organization (BPC)
US debt ceiling talks continue tomorrow with President Joe Biden meeting House Speaker Kevin McCarthy with Treasury Secretary Janet Yellen warning that the US government could run out of money soon, ringing in their ears. Ms. Yellen says the so-called ‘X-date’, when the US Government is unable to pay its bills in full and/or on time’, is June 1st although the closely followed Bipartisan Policy Organization sees a more flexible early-June to early-August deadline depending on cash inflows.
Source: Bipartisan Policy Organization (BPC)
These worries of a debt default are helping the US dollar because buyers of very-short. A single month US Treasury bonds are asking greater rates than the probable X-date. Last Tuesday, the rate of return on the one-month bill reached a record-high level of 5.90%. it is presently trading at a comparable level 5.54%.
The publication of the most recent PMI numbers on Tuesday is likely to lead the Euro to become a bit more volatile. As the market is focused about the US debt negotiations. According to the new data’s sponsor, Hamburg Commercial Bank (HCOB), these flash PMIs ” include based on an analysis of between 75 and 85 percent of the poll’s results. And offer an initial, prompt evaluation of the economic condition.”
Technical Perspective
Late in April, the EURUSD pair hit a new one-year top of 1.1095;.Since then, it has been challenged and denied a few times in May. The pair’s value has been trending downward since the beginning of May. Breaching under 1.0800 at the conclusion of last week on the back of fresh US dollar resilience.
The EURUSD duo has produced an almost unbroken string of lower peak values and lower bottoms this month. Resulting of the push lower, it has fallen beneath both the 20- and 50-day moving averages, creating a bearish scenario.
Retail trading indicates that the EURUSD exchange rate may rise.
According to statistics from retail traders, 56.21 percent of traders are gross long, with a long-to-short ratio of 1.28 to 1.Investors who are overall long are up 2.79% from yesterday and down 8.83% from the previous week. While those who are short on the currency are up 6.30% from earlier and up 6.69% from the previous week.
The fact that investors are who are net-long signals that the price of the EURUSD could keep on decline. Nevertheless, investors have a smaller net-long today than they were yesterday and a week ago. Despite the fact that speculators are still net-long, recent shifts in mood indicate that the present EURUSD pricing pattern may shortly reverse upward.
