On the daily chart, EURUSD continues to trade within a descending channel, indicating a longer-term bearish bias. However, the pair has moved above the 9-day Exponential Moving Average (EMA), with the 14-day Relative Strength Index (RSI) sitting just above 50—signs of building bullish momentum. Initial support is found at the 9-day EMA of 1.1211, followed by the 50-day EMA at 1.1093. A sustained break below these levels could see the pair fall toward the six-week low at 1.0951 and possibly the lower channel edge near 1.0840 or the two-month low at 1.0778.

EURUSD is currently testing resistance at 1.1250, the upper boundary of its descending channel. A breakout above this level could trigger further gains toward the April 21 high of 1.1573—the highest level since November 2021. The pair’s strength reflects investor skepticism about the U.S. dollar, especially after Moody’s downgraded the U.S. credit rating due to rising debt and long-term deficits. Despite a brief dollar rebound, sentiment remains bearish.

The U.S. Dollar Index (DXY) edged up slightly to 100.41 after testing key support at 100.22, but remains under pressure. The 50-SMA at 100.77 looms overhead as resistance, while the RSI at 42.47 suggests continued downward pressure. A break below 100 would signal a loss of confidence in U.S. fiscal management and could drag the index lower toward 99.80. The downgrade and policy uncertainty, especially around tariffs and trade, are key factors in the dollar’s current weakness.

The British pound (GBPUSD) rose to 1.3354 after breaking above its 50-SMA at 1.3282, supported by improved U.K.–EU trade relations and a weakening dollar. RSI at 59.66 reflects steady bullish pressure, though consolidation may occur without clearer U.S. policy direction. USDCAD hovered around 1.3948 with soft support at 1.3938 and weakening bullish momentum (RSI 48.33). Oil strength could weigh on the pair, while sellers continue to cap gains below 1.3980. USDJPY fell to 144.98, slipping beneath the 50-SMA at 145.91. Safe-haven demand for the yen has grown amid concerns about U.S. fiscal reliability, with further declines possible if 144.50 support fails.

Moody’s downgrade of U.S. Treasuries last Friday removed the nation’s final AAA rating, citing worsening debt levels and unresolved fiscal issues. Although the immediate market response was muted, the impact is evident in rising yields: 30-year bonds surged past 5%, and 10-year yields climbed above 4.5%. These developments are fueling broader concerns about U.S. fiscal stability, which are further exacerbated by ambiguous Federal Reserve guidance. Fed officials have warned that ongoing trade tensions complicate their economic outlook and policy decisions.

In summary, the EURUSD pair and other major currency pairs are being driven by growing doubts surrounding the U.S. dollar's reliability, sparked by the recent credit downgrade and murky policy direction. While technical indicators suggest potential for short-term gains in EURUSD and GBPUSD, broader market sentiment remains fragile. Investors are advised to remain cautious, as volatility tied to fiscal uncertainty and interest rate expectations could continue to shape FX markets in the near term.