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 slipped to 90.0 points in February, well short of the estimate of 92.1 points. This marked a 6-month low for the indicator. The markets are expecting the indicator to reverse directions and move higher in March, with an estimate of 91.9 points.
Sentiments and levels
The Eurozone remains mired in weak inflation and growth levels, so the ECB could step in with more easing measures in an attempt to kick-start the economy. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1460, 1.1365, 1.13, 1.1220, 1.1140 and 1.1070.
5 Scenarios
- Within expectations: 89.0 to 95.0: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 95.1 to 99.0: An unexpected higher reading can send the pair below one support level.
- Well above expectations: Above 99.0: The chances of such a scenario are low. Two or more support lines could be broken on such an outcome.
- Below expectations: 84.0 to 88.9: A poor reading could push the pair upwards, and one resistance level could be broken.
- Well below expectations: Below 83.9: A sharp drop in consumer confidence would likely hurt the dollar, and EUR/USD could break above two or more resistance levels.
For more on the euro, see the EUR/USD forecast.
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