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US Dollar Eyes Sentiment, Spending Data as Fiscal Package Heads to Trump

US Dollar Analysis, EUR/USD Price Chart, US Fiscal Stimulus Plan – Talking Points

  • US Dollar may rise if sentiment and consumer spending data spark risk aversion, demand for liquidity
  • Passage of $2 trillion fiscal package could already be priced in as the bill heads to President Trump
  • EUR/USD may retrace recent gains after the pair rose over 3.4 percent from the 2017 swing-low

ASIA-PACIFIC RECAP

The Japanese Yen surged over one percent vs many of its G10 counterparts as US equity futures pointed lower in what appeared to be a “risk off” tilt in Asia. APAC equities trimmed gains as S&P 500 futures turned negative. Chinese industrial production year-to-date on a year-on-year basis showed a -38.3 percent print, the weakest figures on record.

US DOLLAR MAY RISE ON CONSUMER SPENDING, SENTIMENT DATA

US consumer spending data for February is expected to remain unchanged at 0.2 percent, but the outbreak of the coronavirus may have influenced the volume of purchases towards the end of the month. Furthermore, University of Michigan sentiment data will be publishing its final report with expectations of a 90.0 reading, notably lower than the preliminary 95.9 print.

As I wrote in previous articles, about 70 percent of US GDP comes from private consumption. As such, monitoring indicators that track the behavioral disposition of consumers driving this dynamic is crucial. This is especially true in the current environment where policymakers around the world are deploying unprecedented fiscal and monetary stimulus measures to dampen the impact of the coronavirus.

Consequently, the US Dollar may rise if these key statistics out of the world’s largest economy reignite risk aversion and amplify demand for the haven-linked Greenback. The equity selloff in March may have also undermined consumer confidence and spending visa vie the “wealth effect”. The principle asserts that consumption decreases if the perceived value of their assets falls.

EUR/USD TECHNICAL ANALYSIS

EUR/USD has rallied over 3.40 percent after bottoming out at the 2017 swing-low at 1.0654. The pair subsequently shattered several key inflections points along its ascent. If the pair is able to surmount the barrier at 1.1091, the next key resistance level to clear will be the ceiling at 1.1180 (gold-dotted line). However, if the pair capitulates in the face of formidable resistance, it could cause EUR/USD to retrace its recent gains.

EUR/USD – Daily Chart

Chart showing EUR/USD

EUR/USD chart created using TradingView

US DOLLAR TRADING RESOURCES

— Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter