EURUSD should be closely watched with the US debt ceiling over the next week.
EURUSD – Daily Chart
The price of EURUSD is testing another support line at 1.0758 and has room below the 1.0525 level.
Treasury Secretary Janet Yellen said that signs of market stress are beginning to emerge with the default date moving closer. She added that the Biden administration is not preparing for a default and is focusing on completing a debt-limit deal.
"We are committed to not having missed payments and raising the debt ceiling," Yellen said. "We're not involved in planning for what happens if there's a default," Yellen added.
"It's highly likely that we would run out of resources to meet all the government's obligations in early June and possibly as early as June 1," she told the conference. "We no longer see very much likelihood that our resources will enable us to get to the middle or end of June."
With only eight days before the US government enters a potential default on over $31 trillion in debt, the negotiations between the White House and members of the House GOP's team are not settled. Reports say they are switching between being positive and crumbling.
"There is a significant gap between where we are and where they are on finances… and unless and until the White House recognizes that this is a spending problem, we're going to continue to have a significant gap," Garrett Graves said.
The US economy will be back in focus on Friday with a second estimate for Q1 GDP. The forecast is for 1.1% annual growth. Friday brings pricing data with the release of PCE, followed by durable goods orders and Michigan consumer sentiment.
Traders should watch the US dollar closely as the debt ceiling nears, with the potential for volatility that could rattle other markets.
The market was awaiting FOMC minutes on Wednesday that should give some insight into the thoughts of the Federal Reserve. Some feel the central bank is done with interest rate hikes, but officials have hinted at one or two more this year.