EUR/USD: Trading the University of Michigan Consumer Sentiment Index

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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 dipped to 94.3 points in June, within expectations. The downward trend is expected to continue in July, with an estimate of 93.7 points.

Sentiments and levels

Brexit aftershocks are likely to continue weighing on the euro. In addition, the low bond yields in the euro-zone could force the ECB to make a move and adopt further monetary measures such as expanding the QE scheme. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3426, 1.3276, 1.3142, 1.3064 and 1.2840

5 Scenarios

  1. Within expectations: 90.0 to 98.0: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 98.1 to 101.0: An unexpected higher reading can send the pair below one support level.
  3. Well above expectations: Above 101.0: The chances of such a scenario are low. Two or more support lines could be broken on such an outcome.
  4. Below expectations: 86.0 to 89.9: A poor reading could push the pair upwards, and one resistance level could be broken.
  5. Well below expectations: Below 86.0: A sharp drop in consumer confidence would likely hurt the dollar, and EUR/USD could break above two or more resistance levels.
Get the 5 most predictable currency pairs

About Author

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.

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