Euro helped by US shutdown

The euro is near a seven-and-a-half month high after the recent political stalemate in the US hit the dollar.

The euro is trading at $1.37, the highest level it has been since early February as the possibility of a US downgrade drives the euro higher.

On Wednesday, the Democrats and the Republicans struck a deal that ended the partial shutdown of US government bodies and temporarily increased the debt ceiling. Traders bought EUR/USD over fears US government debt will be downgraded, while the partial shutdown had a negative impact on the US economy.

The US non-farm payrolls report and unemployment data will now be issued on Tuesday, after the US Labour department was impacted by the by the partial shutdown. Economists are expecting the unemployment to remain unchanged at 7.3%, but if the rate increases we could see the euro trader higher versus the US dollar, as traders could see it as a sign that the US stimulus package will stay in place for the foreseeable future.

Spot FX EUR/USD (DFB) chart

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