The U.S. dollar traded higher on firm treasury yields despite U.S. debt ceiling talks that appeared to have stalled on Tuesday. If the congress fails to reach an agreement to lift the country’s borrowing capacity, volatility could increase dramatically. Furthermore, the U.S. dollar’s safe haven status may come under questioning in case of a possible U.S. default.
The euro fell back towards 1.0760 on the back of the greenback’s recovery while sterling slid below 1.24.
EUR/USD: Below 1.0740, a next target is at 1.07. On the upside, a current resistance is seen at 1.0870.
As expected, also the DAX corrected recent gains and fell towards the crucial 16000-handle. We expect the recent support area to range from 16000 to 15950 where bulls may take the opportunity to jump back in.
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