When is the US February PCE Price Index and how could it affect EUR/USD?


US PCE Price Index Overview

Friday's US economic docket highlights the release of the Personal Consumption Expenditure (PCE) Price Index, scheduled later during the early North American session at 12:30 GMT. The gauge is anticipated to have risen by 0.2% in February as compared to the 0.6% increase in the previous month. The yearly rate possibly edged lower to 5.3% from 5.4% in January. Meanwhile, the Core PCE Price Index - the Fed's preferred inflation measure - likely held steady at the 4.7% YoY rate and rose 0.4% in February.

Analysts at TD Securities (TDS) offer a brief preview of the report and write: “We expect core PCE price inflation to slow down from a robust 0.6% MoM in Jan to a still-strong 0.4% in Feb (also below core CPI's 0.5% MoM gain). The YoY rate likely rose a tenth to 4.8%, suggesting the path to normalization in price gains will be bumpy. Conversely, personal spending likely fell, but that would follow an eye-popping 1.8% surge in the prior month.”

How Could it Affect EUR/USD?

Ahead of key macro data, the US Dollar (USD) regains positive traction amid hopes that the Federal Reserve might shift back to its inflation-fighting interest rate hikes. A surprisingly stronger report will reaffirm hawkish Fed expectations and prompt some near-term USD short-covering move. This, in turn, will set the stage for some meaningful corrective pullback for the EUR/USD pair, from a nearly two-month high touched on Thursday.

Conversely, weaker PCE data will fuel fresh speculations that the US central bank might soon pause the rate-hiking cycle. This, along with the prevalent risk-on environment and easing fears of a full-blown banking crisis, should weigh on the safe-haven buck and provide a fresh lift to the EUR/USD pair. Apart from this, the prospects for additional rate hikes by the Europen Central Bank (ECB) suggest that the path of least resistance for spot prices is to the upside.

Eren Sengezer, Editor at FXStreet, offers a brief technical outlook for the major and writes: “EUR/USD has met resistance in the 1.0900/1.0910 (psychological level, end-point of the latest uptrend) area late Thursday, confirming that level as a significant resistance. The Relative Strength Index (RSI) indicator on the four-hour chart declined toward 60, pointing to a loss of bullish momentum.”

Eren also outlines important technical levels to trade the EUR/USD pair: “In case the pair manages to hold above 1.0860 (ascending trend line, 20-period Simple Moving Average (SMA)), however, buyers could remain interested. In that scenario, EUR/USD needs to rise above 1.0900/1.0910 and use that level as support to be able to clear 1.0930 (static level, March 23 high) and target 1.1000 (psychological level).”

“On the downside, a four-hour close below 1.0860 could attract sellers and cause the pair to decline to 1.0820 (Fibonacci 23.6% retracement of the latest uptrend, 50-period SMA) and 1.0800 (psychological level),” Eren adds further.

Key Notes

  •   US February PCE Inflation Preview: Bad news for the Dollar, good news for the Fed?

  •   US Core PCE: Banks Preview, inflation still too hot

  •   EUR/USD Forecast: Euro bulls stay on sidelines ahead of US inflation data

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.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD declines below 1.0850 as USD recovers

EUR/USD declines below 1.0850 as USD recovers

Following Tuesday's choppy action, EUR/USD came under modest bearish pressure and declined below 1.0850 on Wednesday. The recovery seen in US Treasury bond yields and the cautious market mood support the USD ahead of FOMC Minutes and weigh on the pair.

EUR/USD News

GBP/USD retreats below 1.2750 following UK CPI-inspired rally

GBP/USD retreats below 1.2750 following UK CPI-inspired rally

GBP/USD retreated below 1.2750 after rallying to a two-month-high above 1.2760 after the data from the UK showed that inflation was higher than expected in April. The US Dollar stays resilient against its rivals on Wednesday as markets turn cautious ahead of the FOMC Minutes. 

GBP/USD News

Gold drops below $2,400, pressured by rising US yields

Gold drops below $2,400, pressured by rising US yields

Gold price turned south on Wednesday and dropped below $2,400. As markets wait for the Federal Reserve to release the minutes of the April 30-May 1 policy meeting, the benchmark 10-year US Treasury bond yield pushes higher and weighs on XAU/USD.

Gold News

Shiba Inu price buy signal hints 25% upswing on the horizon for SHIB holders Premium

Shiba Inu price buy signal hints 25% upswing on the horizon for SHIB holders

Shiba Inu (SHIB) price continues its struggle above a key hurdle. This development comes as SHIB, an ERC-20 meme coin, reacts to the Ethereum spot ETF approval news.

Read more

Fed Minutes Preview: Markets to focus on comments regarding the inflation outlook

Fed Minutes Preview: Markets to focus on comments regarding the inflation outlook

The Fed left unchanged its monetary policy settings following the April 30-May 1 policy meeting as expected. In its policy statement, the US central bank said that there has recently been a lack of further progress toward the 2% inflation target.

Read more

Forex MAJORS

Cryptocurrencies

Signatures