US PCE Price Index Overview
Friday's US economic docket highlights the release of the November Personal Consumption Expenditure (PCE) Price Index, scheduled later during the early North American session at 13:30 GMT. The headline gauge is expected to have edged lower to 0.5% in December from 0.6% previous, while the yearly rate is seen rising to 6.1% from 5.7% in November. The core reading is forecast to come in at 0.5% for the reported month and rise from a 4.8% YoY rate from 4.7%.
How Could it Affect EUR/USD?
A strong than expected reading will boost bets for a 50 bps Fed rate hike in March and push the US Treasury bond yields/US dollar higher. Conversely, a softer print might do little to derail the Fed's plan for an eventual liftoff in March or dent the prevalent strong bullish sentiment surrounding the buck. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.
Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “the pair continues to show extremely oversold conditions with the Relative Strength Index (RSI) staying way below 40. Furthermore, EUR/USD is trading below the descending regression channel coming from mid-January. Even if the pair were rise above 1.1150 and return within the descending channel, sellers are likely to remain in control as long as the 1.1220 (upper limit of the descending channel) resistance holds..”
“On the downside, 1.1100 (psychological level) aligns as the next support. Back in January 2020, EUR/USD extended its decline to 1.1000 after it broke below 1.1100 and a similar action could be expected in the short term,” Eren added further.
Key Notes
• US PCE Inflation Preview: Dollar rally has more legs to run
• EUR/USD Forecast: No convincing recovery in sight for euro
• Further weakness lies ahead for EUR/USD – UOB
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.
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
Editors’ Picks
EUR/USD recovers from two-year lows, stays below 1.0450
EUR/USD recovers modestly and trades above 1.0400 after setting a two-year low below 1.0350 following the disappointing PMI data from Germany and the Eurozone on Friday. Market focus shifts to November PMI data releases from the US.
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as investors await US PMI data releases.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
S&P Global PMIs set to signal US economy continued to expand in November
The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.