US Consumer Confidence Drops; EUR/USD Advances

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US Consumer Confidence Drops; EUR/USD Advances

The US Dollar has softened up recently, and fell further today after the Conference Board Consumer Confidence report disappointed. Let’s take a look at the economic release and then the reaction and technical development of the EUR/USD.

Conference Board Consumer Confidence (Apr.): 95.2
Forecast: 102.6
Previous: 101.4
cbconsumerconfidenceApr2015
(click to enlarge; source: forexfactory.com)

Lynn Franco, director of Economic Indicators at the Conference Board explained:

“This month’s retreat was prompted by a softening in current conditions, likely sparked by the recent lackluster performance of the labor market, and apprehension about the short-term outlook. The Present Situation Index declined for the third consecutive month. Coupled with waning expectations, there is little to suggest that economic momentum will pick up in the months ahead.” (Conference Board)

As the chart shows, confidence was has flattened after the climbed from the 25 low in 2009 to 102.9 in January 2015. Indeed the optimism from the beginning of the year has waned. This should also mean that the FOMC is going to have a tough tine raising rates even at the end of the year. The current trend of softer economic data and now flattening of confidence can hold the FOMC back into 2016.

This means further correction against USD-strength, and even the anemic euro is looking bullish these days against the greenback.

EUR/USD 4H Chart 4/28
eurusd4hchart04282015
(click to enlarge)

The greenback has already been losing to the EURUSD since at least mid-April after the EUR/USD bounced off 1.0520. We can see that even before the consumer confidence data, EUR/USD was already in the bullish continuation scenario for the short-term. At this point, as long as EUR/US:D holds above 1.08, the bullish correction scenario should remain in play. A break below 1.0750 would likely revive the downtrend.

Staying with the current, bullish momentum, the daily chart shows that EUR/USD is poised to test a common resistance around 1.1050. Above this resistance, the next level to monitor is a common support around 1.1270.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.