EUR/USD is trading at $1.357, up 0.4%, after John Boehner of the Republican Party suggested raising the debt ceiling for six weeks. This is not a long-term solution, but it could prevent the US from defaulting on its debts. Two years ago, when the US last increased its debt ceiling, the ratings agency Standard & Poor’s downgraded the country. Dealers are concerned that another downgrade could be imminent, and this is prompting them to buy the euro and sell the US dollar.
At 2.55pm, the US will release the University of Michigan consumer confidence report. Economists are expecting a reading of 77.2, and if the report comes in above this estimate we could see the euro slide versus the dollar.
Due to its partial shutdown over the budget deadlock, the US is producing limited economic news. And we are not expecting any major economic announcements from the eurozone this afternoon.