USD, DXY, USD, EUR/USD, Fed, Biden, Yellen, — talking points
- the U.S. dollar It rose with the support of Treasury yields
- Debt ceiling rotates as a major issue this week as uncertainty persists
- while American dollar gained in all areas, EUR/USD may be weak
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The US dollar regained its rally last week as the DXY posted its biggest weekly gain since September last year.
The DXY is a US dollar index that is weighted against the euro (57.6%), the Japanese yen (13.6%), the pound sterling (11.9%), the Canadian dollar (9.1%), the Swedish krona (4.2%) and the Swiss franc (3.6%).
EUR/USD and GBP/USD saw larger declines while USD/JPY also rose, but to a lesser extent. Treasury yields closed higher on Friday and have so far held steady during the Asian session, with the benchmark two-year note close to 4%.
Concerns remain about the US debt ceiling, but President Joe Biden expressed some optimism over the weekend that a solution could be found. He will meet again with Speaker of the House Kevin McCarthy on Tuesday.
The Senate and House of Representatives are both in session until Thursday. According to the president’s schedule, he will be in Washington until Wednesday before he leaves.
If a deal is not in place by Thursday, the logistics of achieving a satisfactory outcome could become more difficult.
Treasury Secretary Janet Yellen made clear over the weekend that raising the debt ceiling is the job of Congress and that if it is not imminent, there will be damage to the US economy and financial markets.
US dollar (DXY), US 2 cents and 10 US cents
Technical analysis of the EUR/USD pair
EUR/USD remains inside an ascending trend channel but looked closely at the price action on Friday and closed below the 21-day simple moving average (SMA). Bollinger Bands.
The volatility breakout would indicate that potential bearish momentum may be emerging. A close within the range may indicate a pause in the downtrend or a possible reversal.
Support may lie at the previous lows 1.0831, 1.0788 and 1.0713. Among those levels is the 100-day Simple Moving Average and the bullish trend line, currently at 1.0800 and 1.0760 respectively, which could provide support.
On the upside, resistance could be at previous highs in the 1.1075 – 1.1095 area ahead of March 2022 high of 1.1185.
Recommended by Daniel McCarthy
How to trade EUR/USD
– By Daniel McCarthy, Strategist for DailyFX.com
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