17.05.202309:51 Forex Analysis & Reviews: Latest round of negotiations led to nothing

Negotiations between the White House and Congress over the debt limit continue as the two parties attempt to reach an agreement that suits both US President Joe Biden and House Speaker Kevin McCarthy. However, in the latest round of discussions, the members failed to conclude a deal, which is not surprising. After all, there is no quick resolution to the issues and many economists are waiting for a "last-minute" solution.

Biden stated that he would try to keep tabs on the negotiations while abroad, and hopes to meet with Congressional leaders when he returns to the country next week. Initially, he planned to visit Australia and Papua New Guinea, but he forewent these stops in order to continue negotiations in hopes of reaching an agreement.

Both the President and Congressional leaders maintained a cautiously optimistic tone after Tuesday's meeting, saying that although the two sides remain quite far from reaching an agreement, new negotiations from the group will surely lead to finding a middle ground.

Yesterday, US Treasury Secretary Janet Yellen reiterated that the country is facing the catastrophic prospect of defaulting as early as June 1, and markets responded accordingly: bond yields surged, with the 30-year bond rate rising to about 3.9% - the highest level since the disturbances that hit regional banks in March this year.

As for the negotiators upon whom all hope rests, White House Senior Advisor Steve Ricchetti, Director of Legislative Affairs Louisa Terrell, and Budget Director Shalanda Young will represent the Democrats, while Representative Garrett Graves of Louisiana and Speaker's aides will represent the Republicans.

Senate Majority Leader Chuck Schumer said he was more optimistic than last week, while House Minority Leader Hakeem Jeffries praised the "open, honest, and discussion". However, both sides still face significant obstacles to increasing the limit on federal spending.

In terms of the forex market, euro is bearish, but seeing growth is not impossible. For this, the quote has to reach 1.0880, or at least stay above 1.0850. This will allow a rise beyond 1.0910, heading towards 1.0940. In case of a decline around 1.0850, euro will fall to 1.0800 and 1.0770.

Pressure on pound also returned, so to see growth, the quote has to consolidate above 1.2500. Only that will trigger a much larger rise to 1.2535 and 1.2570. In case there is a decline, bears will attempt to take 1.2460, which could lead to a fall to 1.2420 and 1.2380.