The current probability of a rate rise by the Fed is between 20-30%, so if there is a surprise increase, the EUR/USD will be hit hard and the DXY will make major gains.

The EUR/USD rebounded above 1.07 on the news, and the DXY was broadly lower – erasing any session gains.

Weakness in the USD was short-lived due to better-than-expected inflation data from the Eurozone and the debt ceiling talks in the US.

With the US default looking less likely, traders are pulling out of the USD and beginning to look further ahead.

The implications of a US default for global financial markets, including the EUR/USD, are generating attention, particularly considering the US dollar's haven status.