Home EUR/USD : Trading the UoM Consumer Sentiment

EUR/USD : Trading the UoM Consumer Sentiment

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 15:00 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 the level of optimism of the US consumer. The indicator is closely watched by analysts, as consumer confidence is closely linked to consumer spending, a key driver of economic growth.

The  index edged up to 98.1 points in December, shy of the estimate of 98.6. Still, this is the indicator’s highest level since December 2014. Another strong reading is expected in the January report, with a reading of 97.9 points.

Sentiments and levels

Monetary divergence continues to favor the US dollar, and there is uneasiness over the French presidential election, as far-right candidate Marie Le Pen is the front-runner in the first round. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.0950, 1.0870, 1.0775, 1.0650, 1.0615 and 1.0570

5 Scenarios

  1. Within expectations: 95.0 to 102.0: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 102.1 to 106.0: An unexpected higher reading can send the pair below one support level.
  3. Well above expectations: Above 106.0: The chances of such a scenario are low.  Two or more  support lines  could be broken on such an outcome.
  4. Below expectations: 91.0 to 94.9: A weak reading could push the pair upwards, and one resistance level could be broken.
  5. Well below  expectations:  Below 91.0: In this scenario, EUR/USD could break above  two or more resistance levels.

For more on the euro, see the EUD/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.