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 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 remains at very high levels, and improved to 93.3 points in January, ahead of the estimate of 92.7 points. This marked a six-month high. The markets are expecting a dip in the February report, with an estimate of 92.6 points.
Sentiments and levels
US job numbers have not impressed in recent readings, so the Fed could delay any rate hikes until mid-2016. The Eurozone economy continues to limp along, and recent German and Eurozone manufacturing numbers were very soft due to decreased Chinese demand. This is raising concerns, as the Chinese contagion could easily spread to other sectors of the German and Eurozone economies. So, the overall sentiment is neutral on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1460, 1.1373, 1.13, 1.1220, 1.1140 and 1.1050.
5 Scenarios
- Within expectations: 89.0 to 96.0: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 96.1 to 100.0: An unexpected higher reading can send the pair below one support level.
- Well above expectations: Above 100.0: The chances of such a scenario are low. A second support line or more might be broken on such an outcome.
- Below expectations: 92.0 to 95.9: A reading short of the estimate could push the pair upwards, and one resistance level could be broken.
- Well below expectations: Below 92.0: In this scenario, EUR/USD could break above two or more resistance lines.
For more on the euro, see the EUR/USD.
