US Michigan Consumer Sentiment´s preview and its relation with EUR/USD
- US Consumer Sentiment expected to decline in April.
- Uncertainty, the main reason for shrinking confidence.
This Friday, the US will release the preliminary reading of April's Michigan Consumer Sentiment Index, expected at 100.5 from a previous downwardly revised 101.4 from an initial estimate of 102.0. Still, the 101.4 was the stronger figure since January 2004. The index is meant to anticipate future economic conditions according to consumers' current sentiment.
The uncertainty triggered by the announcement of US tariffs on imports was the reason why it was downwardly revised in March, and given that uncertainty has been only escalating ever since, chances are of an even worse-than-expected reading, as these days, is not just about trade tensions between China and the US, but also the crisis in Syria and the menace of missile attacks. The upbeat sentiment of consumers seen in the previous month will likely continue fading in this scenario.
A downward surprise should weight on the greenback, now on the bullish side short-term, but longer-term weak, while a better-than-expected outcome could help the American currency advance further, but with no definitive breakouts at sight.
EUR/USD's price reaction
The common currency has reached what the market sees as dangerous highs, considering the ECB's determination to keep QE in place, and while it can't run, it neither can fall substantially against a vulnerable, unattractive dollar. The result, is the pair trading in a 300 pips range for over two months already, and the US Michigan Consumer Sentiment Index is not the kind of report that can put an end to this situation. Still, it could make some short-term noise.
The pair is currently trading at around 1.2300, with strong supports ahead around 1.2250 and the low set last week at 1.2215. Strong resistances, on the other hand, come at 1.2370 and the 1.2410 region. The closest to any of those extremes ends the pair after the report and ahead of the weekend, the highest the chances of some action news week, always taking into account that sentiment is still the main market motor.
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
