US PCE Price Index Overview
Friday's US economic docket highlights the release of the April Personal Consumption Expenditure (PCE) Price Index, scheduled later during the early North American session at 12:30 GMT. The headline gauge is expected to hold steady at a 6.6% YoY rate during the reported month. The core reading, however, is anticipated to have eased to 4.9% YoY in April from 5.2% previous and rose 0.3% on a monthly basis.
How Could it Affect EUR/USD?
According to Yohay Elam, Analyst FXStreet: “The dollar has been whipsawed in recent days, but when it comes to data, the greenback seems to have been in a win-win situation. A better figure means more rate hikes and a stronger dollar, while a weak figure implies the global economy is weakening – sending investors to the safety of the world's reserve currency.”
This, along with the EUR/USD pair's inability to make it through the 50-day SMA, suggest that the path of least resistance for spot prices is to the downside. Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “The near-term technical outlook shows that the bullish bias remains intact for the time being. EUR/USD holds above the ascending trend line coming from mid-May and the Relative Strength Index (RSI) indicator on the four-hour chart holds comfortably above 50.”
Eren also outlined important technical levels to trade the EUR/USD pair: “On the upside, static resistance seems to have formed at 1.0760. 1.0800 (psychological level) aligns as the next hurdle. Initial support is located at 1.0700 (psychological level, 20-period SMA) before 1.0660 (ascending trend line, static level) and 1.0630 (200-period SMA). As long as the pair manages to end the week above 1.0700, sellers are likely to remain on the sidelines.”
Key Notes
• US Core PCE Preview: Why there is room for a dollar-lifting upside surprise
• EUR/USD Forecast: A weekly close above 1.0700 could be a bullish sign
• EUR/USD invades 1.0760 ahead of US PCE, DXY renews monthly lows
About the US PCE Price Index
The Personal Spending released by the Bureau of Economic Analysis, Department of Commerce is an indicator that measures the total expenditure by individuals. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth: While Personal spending stimulates inflationary pressures, it could lead to raise interest rates. A high reading is positive (or Bullish) for the USD.
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