Awards 2013

The University of Michigan Consumer Sentiment Index surveys consumer attitudes and expectations about the US economy. A reading that is stronger than expected is bullish for the US dollar.


Indicator Background

The University of Michigan 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 indicator remains at high levels, but did drop below the key 80-point level in February, coming in at 79.9 points. This fell short of the estimate of 81.9 points. The markets are expecting a stronger reading in March, with the estimate standing at 81.2 points. Will the market meet or beat this rosy prediction?


Sentiments and levels

The dreaded sales tax hike kicked in last week and is expected to weigh on the fragile Japanese economy. The BOJ has said it has no plans to increase stimulus before July, but it could be forced to act earlier if the economy takes a downturn. In the US, it seems that the economy has been picking up in the spring, thus making Yellen’s hawkish comment more powerful than her dovish ones. The dollar dipped after Nonfarm Payrolls missed the estimate last month, but the key indicator did show a strong improvement compared to the previous release. If US employment numbers remain solid, there is room for the greenback to move higher. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 104.10, 102.74, 101.20, 100, 0.9957 and 0.9897.


5 Scenarios

  1. Within expectations: 78.0 to 84.0: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.

  2. Above expectations: 84.1 to 88.0: An unexpected higher reading can send the pair above one resistance line.

  3. Well above expectations: Above 88.0: The chances of such a scenario are low. A second resistance line could be broken on such an outcome.

  4. Below expectations: 74.0 to 77.9: A poor reading could push the pair upwards, and one support line could be broken.

  5. Well below expectations: Under 74.0: In this scenario, we could USD/JPY below a second support level.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD bulls retain control near 1.3300 mark, highest since March 2022

GBP/USD bulls retain control near 1.3300 mark, highest since March 2022

The GBP/USD pair trades with a positive bias for the third straight day on Friday and hovers around the 1.3300 mark during the Asian session, just below its highest level since March 2022 touched the previous day.

GBP/USD News
USD/JPY keeps BoJ-led losses below 142.50, Ueda's presser eyed

USD/JPY keeps BoJ-led losses below 142.50, Ueda's presser eyed

USD/JPY remains in the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold price is looking to build on the previous day’s rebound early Friday, consolidating weekly gains amid the overnight weakness in the US Dollar alongside the US Treasury bond yields. Traders now await the speeches from US Federal Reserve monetary policymakers for fresh hints on the central bank’s path forward on interest rates.

Gold News
Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu remains strong on Friday after breaking above a symmetrical triangle pattern on Thursday. This breakout signals bullish momentum, further bolstered by a rise in daily new transactions that suggests a potential rally in the coming days.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures