Euro rose in European trade amid attempts to recoup from two-month lows against dollar, and on track for the first profit in five days amid calm trading due to a holiday in European and US markets. 

The gains come amid improving risk appetite after US President Joe Biden and top Congressional Republican Kevin McCarthy reached a deal to end the debt ceiling crisis. 

Now investors await crucial European inflation data in May, which will provide important clues on the chances of a 0.25% rate hike in June.

EUR/USD rose 0.25% to 1.0743, with a session-low at 1.0715, after losing 0.1%5 on Friday, the fourth loss in a row, plumbing two-month lows at 1.0702 following strong US consumer spending data. 

Euro lost 0.8% last week against dollar, the third weekly loss in a row, and the longest such streak of weekly losses this year on concerns about a widening policy gap between the US and Europe. 

Risk Appetite 

US President Joe Biden and Republican leaders in Congress reached a settlement in the weekend to raise the US debt ceiling, avoiding a catastrophic debt default. 

Such a deal boosted market sentiment, but Congress must approve the deal quickly. 

European Rates

Even as the European Central Bank asserted its commitment to a monetary policy path, there remains doubts about upcoming rate hikes in Europe with investors divided on the chances of such hikes in June and July. 

In order to clinch more clues on the future of European interest rates, investors now await important clues on European inflation in May. 

The Dollar

The dollar index fell 0.2% today, the first such decline in six sessions off two-month highs at 104.42 on profit-taking against a basket of major rivals. 

Dollar lost its safe haven appeal after the US debt ceiling crisis was seemingly solved this weekend. 

US stock indices rose on Friday with most major indices marking gains this week on optimism towards debt ceiling negotiations.

Continuous Optimism

Both Reuters and Bloomberg reported from President Biden and Congressional Republican Kevin McCarthy's representatives about progression towards raising the debt ceiling for two years.

The White House issues a statement yesterday, noting that negotiations are progressing well on the crucial issue.

Biden will carry on talks with Congressional leaders later this week to avoid a catastrophic default on payments.

Some sticking points however remain between both sides on this issue.

In a sign of impending danger, Fitch Ratings said it has placed US credit rating under negative review, which might lead to a downgrade.

Data

US consumer spending rose more than expected in April, bolstering estimates about growth in the second quarter, however it might push the Federal Reserve to maintain high interest rates for a longer duration.

US consumer spending rose 0.8% last month, beating estimates of a 0.4% increase.

Such strong data calmed down fears of a sharp slowdown in growth during this quarter.

Dow Jones rose 1%, or 328 points to 33,093, while marking a weekly loss of 1%, with a session-high at 33,162, and a low at 32,795.

S&P 500 rose 1.3%, or 54 points to 4,205, with a weekly profit of 0.3%, with a session-high at 4,213, and a low at 4,155.

NASDAQ added 2.2%, or 277 points to 12,975, with a weekly profit of 2.5%, and a session-high at 13,002, and a low at 12,729.

US stock indices rose on Friday following data and growing optimism on the US debt ceiling crisis.

Continuous Optimism 

Both Reuters and Bloomberg reported from President Biden and Congressional Republican Kevin McCarthy's representatives about progression towards raising the debt ceiling for two years.

The White House issues a statement yesterday, noting that negotiations are progressing well on the crucial issue. 

Biden will carry on talks with Congressional leaders later this week to avoid a catastrophic default on payments.

Some sticking points however remain between both sides on this issue. 

In a sign of impending danger, Fitch Ratings said it has placed US credit rating under negative review, which might lead to a downgrade.

Data

US consumer spending rose more than expected in April, bolstering estimates about growth in the second quarter, however it might push the Federal Reserve to maintain high interest rates for a longer duration.

US consumer spending rose 0.8% last month, beating estimates of a 0.4% increase.

Such strong data calmed down fears of a sharp slowdown in growth during this quarter.

On trading, Dow Jones rose 1.1%, or 3655 points to 33,129 as of 15:37 GMT, while S&P 500 rose 1.1%, or 48 points to 4,199, as NASDAQ added 1.5%, or 196 points to 12,895. 

‏Palladium prices rose on Friday as the dollar lost ground against most major rivals while investors follow latest updates on the US debt ceiling crisis.

Analysts' Expectations

Commerzbank's analysts brought down their estimates for palladium prices from $2000 to $1,700 by the end of 2024.

There reiterated their estimates for palladium prices at $1,600 by the end of 2023, while raising their estimates for platinum prices from $1,250 to $1,300 by the end of 2023, and holding their estimates at $1,150 an ounce by the end of 2023. 

Continuous Optimism 

Both Reuters and Bloomberg reported from President Biden and Congressional Republican Kevin McCarthy's representatives about progression towards raising the debt ceiling for two years.

The White House issues a statement yesterday, noting that negotiations are progressing well on the crucial issue. 

Biden will carry on talks with Congressional leaders later this week to avoid a catastrophic default on payments.

Some sticking points however remain between both sides on this issue. 

In a sign of impending danger, Fitch Ratings said it has placed US credit rating under negative review, which might lead to a downgrade.

Otherwise, the dollar index fell 0.1% as of 15:21 GMT to 104.1, with a session-high at 104.2, and a low at 103.8.

Palladium futures due in June rose 1.6% as of 15:22 GMT to $1,439 an ounce.