- A US debt ceiling agreement boosted risk appetite in financial markets.
- Data revealed higher-than-expected US consumer spending in April.
- Money markets reflect a 62% probability of the Fed raising rates by 25bps in June.
Today’s EUR/USD outlook is bearish. The dollar experienced a slight decline on Monday as a US debt ceiling agreement boosted risk appetite in financial markets. Consequently, it diminished the greenback’s appeal as a haven. Nevertheless, the dollar maintained its position against the euro as it lost ground on Monday.
–Are you interested to learn more about ETF brokers? Check our detailed guide-
The dollar has been supported this month by speculation that the US interest rate hike cycle may not conclude as quickly as anticipated due to indications of economic strength. Friday’s data revealed higher-than-expected US consumer spending in April and an uptick in inflation.
Money markets now reflect a 62% probability of the Federal Reserve lifting rates by 25 basis points in June, compared to approximately 26% probability a week ago.
Notably, US President Joe Biden reached a budget agreement with House Speaker Kevin McCarthy on Sunday, suspending the $31.4 trillion debt ceiling until January 1, 2025.
The positive news from Washington resulted in a rally in global stocks, causing a retreat in the dollar’s safe-haven status. However, trading activity was generally subdued due to holidays in parts of Europe, including Britain and the United States.
Attention will soon shift to the realisation that securing the deal is only a step in the process, and obtaining agreement from the House and Senate by June 5 remains a significant challenge. US Treasury Secretary Janet Yellen warned that the government would default if Congress did not raise the debt ceiling by June 5.
EUR/USD key events today
Trading will be light today amid holidays in Europe and the US. Additionally, investors do not expect important economic data from the US or the Eurozone.
EUR/USD technical outlook: Downtrend looking to break 1.07
The bias for the euro on the 4-hour chart is bearish. EUR/USD has traded lower, respecting the 30-SMA as resistance. At the same time, the RSI hasn’t crossed above 50 since the downtrend started, showing strong bearish momentum.
–Are you interested to learn more about Thailand forex brokers? Check our detailed guide-
The price currently trades below the 1.0755 key level, which acts as resistance. The next support is at the 1.0700 level. Since bears are strong, the price will likely soon take out the 1.0700 key level.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.