Ella 
In early Asian trading on Tuesday, EUR/USD continued to decline, falling to around 1.0580.
EUR/USD hit its lowest closing level since March on Monday despite ECB President Christine Lagarde telling the European Parliament that interest rates will remain restrictive as long as necessary.
However, Lagarde also stressed that inflation is expected to “remain too high for too long.” However, the ECB faces a challenging situation as it must carefully strike a delicate balance between responding to inflationary pressures and not damaging the euro zone’s imbalanced domestic economy.
The 10-year Treasury yield rose to 4.55%, its highest level since October 2007. The Federal Reserve will maintain higher interest rates for a longer period of time to maintain the resilience of the U.S. economy.
U.S. President Joe Biden and one of his top advisers have warned of the potential consequences of a federal government shutdown. They expressed concern that such closures could trigger broader hardships, including nearly 7 million low-income women and children losing food benefits.
The statement noted that President Joe Biden and House Speaker Kevin McCarthy reached a prior agreement on government spending levels. However, the statement noted that the Republican-controlled House of Representatives may try to pass deep budget cuts this week.
The cuts require approval by the Democratic-controlled Senate, which is expected to reject them. If the House and Senate cannot reach an agreement on government spending, some government agencies may be shut down next Sunday.
Investors are focusing on the Fed’s inflation measures, the core personal consumption expenditures (PCE) price index and the euro zone’s core consumer price index, both of which are scheduled to be released on Friday.
