The University of Michigan Consumer Sentiment Index surveys consumer attitudes and expectations about the US economy. An increase in consumer confidence is a positive sign about the health of the economy and is bullish for the US dollar.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Friday at 14:00 GMT.
Indicator Background
The UoM Consumer Sentiment Index, which is released monthly, is an important leading economic indicator. It helps measure future spending behavior, and provides an indication of consumer confidence in the economy. Analysts look to the index to help answer that all-important question of “is the US consumer optimistic or pessimistic about the economy”?
The index surged in June, climbing across the 90-level with a reading of 94.6 points. This beat the estimate of 91.3 points. The markets are expecting the upswing to continue, with an estimate of 96.0 points. Will the indicator match or beat this rosy expectation?
Sentiments and levels
The euro is struggling, as the continental currency finds itself below the 1.09 line. Greece and its creditors appear to have cut a deal after tortuous negotiations, but the drama is far from over. The Greek government is being challenged over the debt deal from within and by many Greeks, and Prime Minister Tsipras will have not have an easy time keeping his government afloat.
The damage has been done, and not only for Greece. As expected, ECB head Mario Draghi came out in support of the debt deal and this brings us to the main driver: monetary policy divergence that now returns to the forefront. The US is not immune, as the Fed expressed concern about Greece in the recent minutes. If the Greece issue is resolved, there are fewer hurdles for the Fed to hike in September. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1113, 1.1050, 1.0910, 1.0865, 1.0760 and 1.0660.
5 Scenarios
- Within expectations: 93.0 to 99.0: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 99.1 to 102.0: An unexpected higher reading can send the pair below one support level.
- Well above expectations: Above 102.0: The chances of such a scenario are low. A second support line or more might be broken on such an outcome.
- Below expectations: 90.0 to 92.9: A poor reading could push the pair upwards, and one resistance level could be broken.
- Well below expectations: Below 90.0: A sharp drop in consumer confidence would likely hurt the dollar, and EUR/USD could break above two or more resistance levels. To follow this event live:
For more on the euro, see the EUR/USD.
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