The Euro is declining as Germany confirmed it is entering a recession. The U.S. Dollar has reached 2-month highs. Traders were greatly expecting the Federal Reserve (Fed) to cut its rates, but the situation changed dramatically in May.

The Fitch ratings agency downgraded the United States debt ratings to 'AAA' negative, indicating a potential downgrade if a debt ceiling deal is not reached. On the other side, the Greenback is a safe haven asset that will help the economy survive a possible technical default in the U.S. after the June 1 deadline. With only one week remaining and no deal reached, the single currency is facing a double hit from Germany's recession - which serves as the EU's economic engine - and from the strengthening of the U.S. Dollar. New short positions for EURUSD can be opened only below the range of 1.0660 to 1.0530. The current target for existing short trades is at 1.0660.