The US Dollar (USD) stays on the back foot to start the new week as market participants stay focused on headlines surrounding the debt limit negotiations in the US. In the European session, Germany’s Bundesbank will release its monthly report and Eurostat will publish the preliminary Consumer Confidence Index data for May. There won’t be any high-impact macroeconomic data releases featured in the US economic docket but several Fed officials will be delivering speeches.

While speaking on Friday, FOMC Chairman Jerome Powell reiterated that they are strongly committed to return inflation to the 2% target. Regarding the potential impact of the recent banking crisis on the policy, Powell said that rates may not need to rise as much as it would have otherwise. Although the US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, registered losses on Friday, it ended up closing the second straight week in positive territory.

Following his phone call with House Republican Speaker Kevin McCarthy on Sunday, US President Joe Biden said that the conversation went well and added that they will speak again on Monday. Meanwhile, US Treasury Secretary Janet Yellen said over the weekend that June 1 is the “hard deadline” to raise the debt ceiling.

EUR/USD touched its lowest level since late March at 1.0760 on Friday but managed to stage a technical correction ahead of the weekend. The pair trades in a narrow channel slightly above 1.0800 early Monday.

Despite the broad-based US Dollar strength, GBP/USD held its ground and closed virtually unchanged last week. Nevertheless, the pair is having a difficult time gaining traction at the beginning of the week and moving sideways below 1.2450.

USD/JPY gained more than 200 pips last week and registered its highest weekly close since November. The pair stays quiet in the European morning and fluctuates below 138.00.

Gold price stayed under heavy bearish pressure amid rising US Treasury bond yields last week and came within a touching distance of $1,950. Although XAU/USD recovered decisively on Friday, it is struggling to build on those gains early Monday while trading slightly below $1,980.

AUD/USD trades in the red below 0.6650 early Monday. In the Asian session on Tuesday, S&P Global will release Manufacturing and Services PMI reports for Australia.

Bitcoin posted marginal losses on Sunday but stayed in its weekly range. Early Monday, BTC/USD trades flat on the day slightly below $27,000. Ethereum continues to fluctuate in a tight channel at around $1,800 following the previous week’s indecisive action.