The euro stabilized on Wednesday at 1.4490, bringing the US dollar to its lowest level in three weeks as traders remained worried about the deadlock in talks on raising the US debt ceiling.
Around 8:45 A.M. GMT, the European currency stood at 1.4490 after hitting 1.4510 yesterday around 9:00 P.M. GMT.
The euro briefly touched 1.4536 dollars this morning, one of the highs for the month of July.
Vis-a-vis the Japanese yen, the EU’s single currency lost ground trading at around 112.53 yen ( 8:45 A.M. GMT) compared to 113.02 on the close of trading on Tuesday.
The US dollar is currently suffering from the lack of consensus in Washington regarding raising the US debt ceiling – which reached $14.3 trillion in May – and cutting federal spending. If negotiations between Republicans and Democrats do not lead to an agreement by August 2nd, the world’s largest economy may default on its obligations; although some analysts on Wall Street believe the US could continue to pay its financial obligations until mid-August in case no agreement is reached.
This is what the analysts had to say about the EUR/USD currency pair in the near-term:
– Although the markets believe in a last-minute solution on the debt ceiling, investors are beginning to worry about an “inevitable degradation of the US debt by rating agencies,” Teppei Ino, an analyst at the Bank of Tokyo-Mitsubishi UFJ, commented.
– “Attention will remain fully focused on talks between US politicians and their ability to reach an agreement to reduce the budget deficit and avoid a worsening of their credit rating,” read a statement from the National Australia Bank.
Later today, investors will attempt to glean information about the health of the US economy from the publication of the US Federal Reserve’s Beige Book at 7:00 P.M. GMT.