The US Dollar

The US Dollar (USD) is facing downward pressure at the start of the new week, with market participants closely monitoring the ongoing debt limit negotiations in the United States.

During the European session, Germany’s Bundesbank will release its monthly report, while Eurostat will publish the preliminary Consumer Confidence Index data for May. Although no significant macroeconomic data releases are expected in the US economic agenda, several speeches by Federal Reserve officials are anticipated.

FOMC Chairman Jerome Powell, in his remarks on Friday, reaffirmed the strong commitment to achieving the 2% inflation target. Regarding the potential impact of the recent banking crisis on policy, Powell suggested that interest rates may not need to rise as significantly as they would have otherwise.

Despite the US Dollar Index, which tracks the performance of the USD against a basket of major currencies, experiencing losses on Friday, it concluded the second consecutive week with gains.

Following a phone call with House Republican Speaker Kevin McCarthy on Sunday, US President Joe Biden expressed satisfaction with the conversation and stated that they would continue their dialogue on Monday.

Meanwhile, US Treasury Secretary Janet Yellen emphasized that raising the debt ceiling must be done by June 1, referring to it as a “hard deadline.”

On Friday, the EUR/USD pair reached its lowest level since late March, touching 1.0760, but managed to stage a technical correction before the weekend. Early Monday, the pair is trading within a narrow channel just above 1.0800.

Despite the overall strength of the US Dollar, the GBP/USD pair remained relatively stable last week and closed with minimal changes. However, at the beginning of this week, the pair is struggling to gain momentum and is moving sideways below 1.2450.

Last week, USD/JPY saw a gain of over 200 pips, achieving its highest weekly close since November. Currently, the pair remains calm during the European morning session, fluctuating below 138.00.

Gold prices experienced significant bearish pressure last week due to rising US Treasury bond yields, coming close to the $1,950 level. Although XAU/USD saw a decisive recovery on Friday, it is facing difficulties in sustaining those gains early on Monday, trading slightly below $1,980.

Early Monday, AUD/USD is trading in negative territory below 0.6650. In the Asian session on Tuesday, S&P Global will release Manufacturing and Services PMI reports for Australia.

Bitcoin recorded marginal losses on Sunday but stayed within its weekly range. At the start of the week, BTC/USD is trading flat, just below $27,000. Ethereum, on the other hand, continues to fluctuate within a tight range around $1,800, following a week of indecisive price action.


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