U.S. Debt Ceiling Talks

Welcome to a new trading week.

Hopes of a deal in Washington to raise the debt ceiling to avoid a catastrophic default have buoyed the U.S. dollar. However, while everyone knows that raising the debt ceiling once again is not the solution of the U.S.’s fiscal problems, the country faces a significant risk of defaulting on payment obligations within the first two weeks of June without a debt ceiling increase.

Thus, U.S. debt ceiling talks are likely to dominate the market sentiment in this week. Furthermore, interesting data releases could be U.K. inflation data (Wednesday), U.S. Q1 GDP (Thursday) and the U.S. core PCE price index (Friday).

EUR/USD: The euro found a short-term support at around 1.0750. If 1.0760 breaks, a next target will be at 1.0715. In the meantime, and remaining above 1.08, most traders expect a correction towards 1.09.

GBP/USD: Sterling has slowed its sell-off and was able to hold above 1.24. As long as this handle holds, we anticipate a rebound towards at least 1.2550.

DAX: Recharging batteries before a renewed bull run

The index slightly corrected after hitting a fresh high at 16334. While bulls seem to be in the starting holes for another leg up, the index is currently in overbought territory, increasing the chances for a correction towards 16000. However, bulls need more strength to break the 16350-handle significantly which is why we expect some kind of consolidation before bullish momentum increases again.

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Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

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