The Euro remains firmer for the second consecutive day around 1.0870 as it defends the previous day’s rise against the US dollar after a disappointing round of data from the US
Heading into Tuesday’s European session as market participants await a big day of US economic data including Eurozone GDP figures and US retail sales numbers as well as the outcome of US government debt ceiling talks.
The US dollar came under pressure yesterday after data showed the New York Federal Reserve's Empire State manufacturing index plunged to -31.8 this month from a reading of 10.8 in April.
The fall in the closely watched index was the largest decline since April 2020 and the lowest since January's three-year low of -32.9 and add to the case that the Federal Reserve may have to take a pause on interest rate hikes next month.
Also helping the Euro is the current standoff in the US government as they attempt to address the debt ceiling issue, which could force the U.S. government to default on its debt if not resolved.
President Joe Biden is scheduled to meet with congressional leaders on today for face-to-face talks, a day before he leaves for a meeting of the Group of Seven nations in Japan.
Ahead of Tuesday's meeting, U.S. House Speaker Kevin McCarthy warned on Monday that there has been "no movement" toward an agreement to lift the $31.4 trillion debt ceiling in talks with the White House, and he warned that time is running out to get a deal through Congress.
"The market is in consolidation mode and waiting for clearer signals from Washington on how they're going to avert a U.S. default," said Amo Sahota, director at FX consulting firm Klarity FX in San Francisco.
"I don't think there are key market levels that have been broken. Euro/dollar is still above $1.08. On Friday, it was threatening to drop below $1.08.
Looking further ahead today, the main drivers of the EUR/USD currency pair as earlier mentioned will be the release of GDP figures from the Eurozone as well as retail sales figures from the US which are expected to hit the market at 0.6 percent which is a solid rebound from last months figure of -0.7 percent.
The GDP figures are expected to come in at due to come in at 0.1 percent on a monthly basis and for the yearly figure market participants are waiting for a figure of 1.3 percent.