As the US markets gear up for the post-Memorial Day reopening, the US Dollar is grappling with losses. Despite a weekend break, the Greenback is feeling the heat as a risk-on sentiment dominates the market atmosphere. Contributing to this pressure are remarks from Japan’s Finance Minister, Shun’ichi Suzuki, who cautioned speculators against further devaluation of the Yen. He emphasized Japan’s readiness to implement significant measures to stabilize the exchange rate. 

Investor sentiment is tilting away from the expectation of imminent Federal Reserve interest rate cuts. Interest rate derivatives, such as overnight index swaps, price in a 50% chance that the Fed will maintain its current policy stance in September, a notable increase from the 35% probability observed just a week prior. 

On the data front, the US Treasury is set to auction four different maturities across the yield curve, while three Federal Reserve speakers are scheduled to share their insights on Tuesday. Meanwhile, the March Housing Price Index disappointed, with a mere 0.1% rise compared to February's 1.2%, falling short of the anticipated 0.5%. 

In currency movements, EUR/USD hit a new weekly peak at 1.0880 during the American session on Tuesday. The pair's rise is buoyed by a softer US Dollar and growing uncertainty regarding the European Central Bank's timeline for rate cuts post-June. 

On the technical side, the EUR/USD chart indicates a potential bullish breakout from its downtrend channel. The pair is challenging the upper boundary of the descending channel around the 1.0900 mark, highlighted by the two circled areas where the price has tested this resistance. The RSI is trending upward, suggesting increasing buying momentum. If the EUR/USD manages to sustain itself above this resistance level, it could target the next significant resistance at 1.10:

The robust outlook for the US economy, combined with the Fed’s hawkish stance, has led traders to scale back their rate cut expectations. Minneapolis Fed President Neel Kashkari suggested that the Fed should await substantial progress in curbing inflation before reducing rates. He also indicated that further rate hikes remain on the table if inflation doesn’t abate.

This week's speculation around Fed rate adjustments will be heavily influenced by the core Personal Consumption Expenditure price index data for April, set to be released on Friday. The core PCE, a key inflation metric for the Fed, is expected to remain stable both on a monthly and annual basis. 

Over in the UK, the Pound Sterling broke through the 1.2800 level against the Dollar in Tuesday’s New York session. The GBP's strength is underpinned by positive sentiment and growing uncertainty about the Bank of England's rate cut timeline. Initially, investors had anticipated the BoE would start reducing rates in June, based on expectations that the UK’s annual inflation rate would drop to 2% in April. BoE Governor Andrew Bailey, speaking at an IMF event in Washington on April 16, echoed this sentiment, forecasting a decline in inflation towards the 2% target in the coming months.

The GBP/USD chart reveals the pair testing a crucial resistance level near 1.2800, as marked by the red circle. This area aligns with the upper boundary of a rising wedge pattern, suggesting a potential bearish reversal if the pair fails to break higher. The RSI is approaching overbought territory, which could indicate a pullback is imminent: