The Dollar rebounded yesterday. Markets are set to remain very sensitive to US debt ceiling news into the weekend, and the Dollar’s support may linger barring positive developments.

Washington holds the key to the Dollar’s correction

“We still think investors are worryingly eyeing a scenario where it would ultimately take an adverse market reaction to break the impasse, and lack of any progress towards a deal can definitely continue to offer some support to the Dollar.”

“On the other hand, a benign scenario where a bipartisan deal has a positive impact on sentiment can leave the Dollar quite vulnerable given the quite aggressive rate cuts being priced into the USD curve, which the Dollar is not currently negatively discounting thanks to safe-haven demand.”