US debt ceiling deal

The US House of Representatives has passed a bill increasing the debt limit. It was developed by President Joe Biden and Speaker Kevin McCarthy. The law is expected to impose restrictions on government spending and prevent default in the United States. Lawmakers from both parties have come together to approve the bill, which is a rare moment of bipartisan agreement. The agreement will now be sent to the Senate, where it will be voted on for approval, the likelihood of which is 99.9%. The only question is the timing. The fact is that the US government will soon run out of funds to pay its bills. The deadline is June 5.

Signals from the Federal Reserve

Yesterday, Federal Reserve officials strongly signaled their intention to keep interest rates at current levels at the June meeting this year. However, there is still a possibility of further increases in the coming months. A pause in the rate hike cycle will give policymakers time to assess data but will not hinder future tightening, said Governor Philip Jefferson on Wednesday. Philadelphia Fed President Patrick Harker also echoed this sentiment, calling for a pause in June. This viewpoint undermines the importance of the monthly employment report, which is scheduled to be released this Friday. It is often seen by Wall Street as a key indicator affecting Fed policy.

The rally is coming to an end

Investors participating in the artificial intelligence theme rally are currently experiencing some difficulties. Shares of Nvidia and other major companies in this field dropped after a strong upward movement. Nvidia shares fell 5.7% after the chip manufacturer briefly reached a market capitalization of $1 trillion earlier this week. The increase of more than 250% compared to the low recorded in October could have provided an attractive opportunity for future profits. However, everyone understands that the market needs a correction. It is expected that Wall Street will continue to be obsessed with everything related to artificial intelligence this year.

Standoff with China

The United States and the European Union continue their active efforts to negotiate with each other on specific ways to slow down China's technological rise and limit its trade practices. However, both countries have recognized the need to ease tension in their relations with Beijing. Senior US officials insist that the EU agrees to jointly develop a new mechanism to review investments in China's promising areas. Instead, both sides at the meeting in Sweden chose not to raise this issue.

Important statistical data

The ECB will publish the minutes of the May policy meeting, and ECB President Christine Lagarde and German Finance Minister Christian Lindner will deliver speeches at the conference. Traders are waiting for the data on the business activity indexes in the manufacturing sector as well as inflation data in the eurozone.

As for the technical picture of EUR/USD, the bearish market for the euro is still in place. To regain buyers' momentum, it is necessary to defend 1.0660 and gain control of 1.0710. This will allow the pair to move towards 1.0755. From this level a climb to 1.0790 is possible, but it will be quite challenging without strong fundamental statistics from the eurozone. In the case of a decline, I expect actions from major buyers around 1.0670. If no one appears there, it would be good to wait for a new low at 1.0635 or open long positions from 1.0595.

As for the technical picture of GBP/USD, the pressure on the pound has weakened. One can expect a rise in the pair only after regaining control above 1.2440. A breakthrough of this level will strengthen hopes for a further recovery towards 1.2480, after which a more significant upward surge towards 1.2500 can be discussed. In the case of a decline, bears will attempt to take control below 1.2410 and 1.2380. If they succeed, breaking through these ranges will strike a blow to bullish positions and push GBP/USD towards a low of 1.2340 with the prospect of reaching 1.2310.