Optimism and Speculation Surrounding US Debt Ceiling Propel U.S. Dollar Higher
Gregor Horvat | May 19, 2023 02:50AM ET
The US dollar has exhibited strength this week, largely driven by optimism and speculative anticipation regarding the US debt-ceiling. Market speculators anticipate the approval of the debt-ceiling increase, as failure to do so would have severe repercussions for the financial market. Reuters reports that Janet Yellen has issued repeated warnings, emphasizing that a failure by Congress to raise the federal debt limit of $31.4 trillion could lead to a "constitutional crisis" and unleash a catastrophic economic and financial situation for both the United States and global economies.
Looking at the technicals, the EURUSD has been trading higher since March, and reached a new 2023 high where pair experienced a failure break to the upside, which certainly can be the case as recovery was slow and overlapping up from March low, so ideally that was a corrective (B)-wave as part of a big flat correction. So far we can see some bearish price action, three waves but an extended decline and break below 1.0836 support suggests that this is an ongoing bearish impulse for wave C of a flat.
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