empty
26.05.2023 09:47 AM
US debt ceiling talks in progress

US stock markets have slightly recovered, while the euro and British pound have halted their decline following rumors that Republicans and White House representatives are approaching an agreement to raise the debt ceiling and limit federal spending for two years.

In recent days, the parties have narrowed their disagreements on many issues, although the agreed-upon details are preliminary, and a final agreement has not yet been reached. Both sides have yet to agree on the amount of the ceiling. According to the terms of the new agreement, defense spending next year may increase by 3% in line with President Joe Biden's budget request. The Speaker of the House also signaled optimism about the debt deal yesterday.

This image is no longer relevant

Reportedly, the agreement will also include measures to modernize the national power grid for using renewable energy sources, as well as expedite permits for pipeline construction and other projects related to fossil fuels. The Republican Party places a strong emphasis on this. The deal is expected to result in a $10 billion reduction in spending.

Meanwhile, the final expenditures and budget will be slightly less restrictive than the Republicans' initial proposal, which called for raising the debt ceiling until March of next year in exchange for 10 years of spending cuts.

After a recent meeting, a Democratic adviser to the House of Representatives stated that the White House is not disclosing the details of the spending limit agreement or IRS funding. "We know where our differences lie," Speaker of the House Kevin McCarthy said, adding that he planned to work on the deal over the holiday weekend. "We do not have an agreement yet. We knew this would not be easy. It's hard, but we're working. And we're going to continue to work till we get this done," he stressed.

If an agreement is reached soon, Tuesday is likely to be the day for a vote in the House of Representatives. Then the Senate will need to act quickly to send it to President Biden's desk by June 1, when Treasury Secretary Janet Yellen said her department could run out of cash.

When Republican representatives asked Patrick McHenry, the Chairman of the Financial Services Committee, what he would tell investors about the negotiations' progress, quipped, "Glad the market's closed."

On Wednesday, the Fitch Ratings agency placed the US credit rating and its AAA level under scrutiny for a potential downgrade. Following this, the White House and the Treasury Department stated that Fitch demonstrated the urgency of resolving the dispute as soon as possible.

As for the EUR/USD pair, the trend is still bearish. Bulls need to defend 1.0715 and reach 1.0760 to return to the market. This will allow them to drag the price to 1.0790. From this level, it is possible to climb to 1.0840, but without solid fundamental statistics for the eurozone, it will be quite challenging. If the trading instrument declines, big buyers are expected to enter the market at 1.0715. If there is no activity at this level, it would be better to wait for a new low of 1.0670 or open long positions from 1.0630.

Regarding the GBP/USD pair, pressure on the British pound remains. The hope for an upward movement in the pair can only be expected after reclaiming control of 1.2360. Only a breakthrough of this level may strengthen the prospects for a recovery towards 1.2410, after which a more significant surge to 1.2460 can be considered. In the case of a decline in the pair, bears are likely to gain control of 1.2310. If they succeed, breaking through this range will strike a blow to bullish positions and push the pound/dollar pair to a low of 1.2260, opening the way to 1.2220.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD: The Illusion Bubble – Dollar Weakens Amid Strengthened Risk Sentiment

Markets are optimistic ahead of Donald Trump's inauguration. Increased risk appetite has allowed EUR/USD buyers to recover from Friday's lows, with the pair now trading above the 1.0300 target

Irina Manzenko 23:40 2025-01-20 UTC+2

USD/CAD: Analysis and Forecast

The USD/CAD pair retreated slightly after reaching its highest level since March 2020 during the Asian session on Monday, amid a modestly weaker US dollar. However, this pullback

Irina Yanina 13:23 2025-01-20 UTC+2

The Market Finds Shelter

The S&P 500 achieved its best weekly performance since the November U.S. presidential election, just before Donald Trump's inauguration. Initially, investors worried that his protectionist policies could negatively impact

Marek Petkovich 08:02 2025-01-20 UTC+2

EUR/USD Weekly Preview: Trump's Inauguration, Lagarde's Speech, ZEW and PMI Indices

The economic calendar for the upcoming week is not packed with significant events. Key reports for EUR/USD (Nonfarm Payrolls, CPI, PPI) were released in the first half of January, while

Irina Manzenko 05:24 2025-01-20 UTC+2

Overview of the GBP/USD Pair on January 20: The Fairy Tale Is Over, but There Was Never a Fairy Tale

On Friday, the GBP/USD currency pair experienced another decline. Among the macroeconomic data released that day, one notable highlight was yet another disappointing data from the UK. Although

Paolo Greco 04:46 2025-01-20 UTC+2

Overview of the EUR/USD Pair on January 20: The Euro Prepares for a New Decline

The EUR/USD pair continued its gradual decline on Friday. We have consistently pointed out that the euro has no reasons to rise, and this remains true. Our scenario and forecast

Paolo Greco 04:46 2025-01-20 UTC+2

Fresh news on gas market situation

The gas market is experiencing significant and steady growth, which is not surprising given recent events. According to recent reports, after the outgoing Biden administration introduced several sanctions against Gazprom

Miroslaw Bawulski 13:37 2025-01-17 UTC+2

USD/JPY: Analysis and Forecast

The Japanese yen is declining, giving up part of its strong weekly gains against the US dollar. The ceasefire agreement between Israel and Hamas, along with a positive sentiment

Irina Yanina 11:35 2025-01-17 UTC+2

EUR/JPY: Analysis and Forecast

Today, the EUR/JPY pair is attempting to attract buyers, trading slightly above the psychological level of 160.00. However, this rise lacks bullish conviction due to divergent monetary policy outlooks between

Irina Yanina 11:32 2025-01-17 UTC+2

Bitcoin Kicks Off the Party

Bitcoin looks poised for a celebratory rally ahead of Donald Trump's inauguration, as the president-elect has pledged to make America the global hub for cryptocurrency. Insider reports from Bloomberg indicate

Marek Petkovich 08:20 2025-01-17 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.