Investors breathed a sigh of relief when yesterday, the Senate passed a law suspending the US debt ceiling and imposing spending limits until the 2024 elections. This put an end to the drama that threatened a global financial crisis. Now, the new bill will go to President Joe Biden, who reached a deal with House Speaker Kevin McCarthy just a few days before the looming US default.

The legislation passed the Senate by a vote of 63-36. Although many expressed concerns about parts of the deal, they finally realized that their concerns were not worth the chaos that a default would cause. Investors, who had largely assessed the risk of a US default, are now shifting their attention to other sources of uncertainty, such as the Federal Reserve's policy and the US labor market.

Experts note that hours of negotiations between the two parties were needed to pass the new bill through the Senate. The passage of the new bill in the Senate put an end to the worst standoff between the two parties over the US debt in the last 10 years. Now, it remains only to speculate who will benefit from the situation. Biden and McCarthy's political game, which has faced sharp criticism from lawmakers, will certainly harm the weakening US economy as it took too much time.

The two-year spending limit will definitely deliver an additional short-term blow to the economy, already vulnerable to a recession. Economists also believe that cutting expenses in certain areas will hardly change the unstable medium-term trajectory of federal debt. According to their estimates, it is still on track to reach 97% of GDP in 2022 and over 130% of GDP by 2033.

It is certain that the deal, which prevented economic upheaval, will surely add a significant advantage to Biden's bid for reelection in the next presidential elections. It will also strengthen his reputation as a pragmatic individual working beyond party affiliation.

As for the bill itself, it will set the course of federal spending for the next two years and suspend the debt ceiling until January 1, 2025. This, in turn, will allow officials to avoid another showdown over borrowing until the presidential elections. Democrats agreed to limit federal spending for the next two years in exchange for Republican votes for the suspension.

In his statement after the Senate vote, Biden thanked Schumer and McConnell and called the agreement a reminder that they all act in the interest of the country. The White House stated that the president will address the nation tonight to discuss the agreement.

As for the technical picture of EUR/USD, the correction of the euro has begun. To maintain control, buyers should defend 1.0740 and reach 1.0770. This will allow them to move towards 1.0800. From that level, it is possible to climb to 1.0835. However, it will be quite challenging without strong fundamental statistics from the Eurozone and weak data from the US. In the case of a decline, I expect some action from major buyers only around 1.0740. If no one is there, it would be good to wait for a new low at 1.0700 or open long positions from 1.0666.

As for the technical picture of GBP/USD, demand for the pound remains high. One can expect growth in the pair after gaining control over 1.2540. Only a breakout of this level will strengthen hopes for a further recovery towards 1.2580. After that, the pair may surge towards 1.2610. In the case of a decline in the pair, bears will attempt to take control below 1.2500. If they succeed, a break of this range will hit the bullish positions and push GBP/USD towards a low of 1.2470 with the prospect of reaching 1.2440.