Dollar keeps trading in narrow range ahead of congressional debate on tax bill

On Tuesday, the dollar is holding in a narrow range. Pressure on the currency is created by the discussion in the US regarding a new bill that could increase the country's budget deficit.

Earlier, Moody's agency stripped the US of its top credit rating, citing concerns about the growing national debt of $36.2 trillion. According to analysts quoted by Reuters, Trump's new tax bill will increase the national debt by up to $5 trillion.

As noted by Rodrigo Catril of National Australia Bank, market participants are still highly cautious about the lack of fiscal austerity measures in the US. In his opinion, this could be a driver for dollar weakness in the near future, as the market will demand a higher premium for lending money to the US.

Meanwhile, the Australian dollar was the only currency from the main basket that showed a pronounced change in rate against the US dollar. Against the background of the rate cut by the Reserve Bank of Australia by 0.25%, the local currency weakened by 0.5% against the US one. 

Now the attention of market participants is focused on the outcome of the tax bill discussions in the United States.