EUR/USD extended its rally for the third straight day on Wednesday (5/21) as the US Dollar (USD) continued to face headwinds following Friday's US credit rating downgrade. This, coupled with the vote for Trump's "One Big, Beautiful Bill," weighed on traders, as it would increase the national debt, which has been deemed unsustainable by Federal Reserve (Fed) Chairman Jerome Powell.
The single currency continued to capitalize on broad US Dollar weakness. Moody's revision to downgrade the US government debt rating from AAA to Aa1 on Friday fueled investor concerns over the weekend as the Trump administration's budget is set to be voted on in the US Congress.
A lack of economic data in the Eurozone (EU) and the US kept traders entertained with speeches from European Central Bank (ECB) and Fed officials. Additionally, US trade deal talks, market sentiment, and geopolitics helped shape the EUR/USD's path.
Recently, ECB member Jose Luis Escriva commented that the recent appreciation of the euro was a surprise, adding that it will be more difficult to predict how tariffs will affect inflation.
On Thursday, the economic docket will feature May HCOB Purchasing Managers' Index (PMI) data in the EU, Germany, and France. Across the pond, the US economic docket will feature Initial Jobless Claims and the S&P Global PMI, which are expected to be unchanged, according to forecasts.(alg)
Source: FXstreet
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