U.S. Consumer Confidence is expected to fall for a second month to 49.0 after June’s unexpected drop as a weak labor market continues to raise concerns. Last month brought an end to four consecutive months of rising optimism including a surge from 26.90 to 54.80 over the previous two periods.
[B]Fundamental Outlook[/B]
U.S. Consumer Confidence is expected to fall for a second month to 49.0 after June’s unexpected drop as a weak labor market continues to raise concerns. Last month brought an end to four consecutive months of rising optimism including a surge from 26.90 to 54.80 over the previous two periods. However, we could see an upside surprise on the back of rallying stock markets as corporate earnings season saw better than expected profits. Yet, most of the gains were on cost cutting which has led to speculation that we could see a jobless recovery. Until we start to see an improvement in the labor market sentiment may subdued which could limit domestic growth prospects and weigh on risk appetite. Therefore, a drop in consumer confidence could lend dollar support which would conflict with the bullish EUR/USD technical outlook.
[B]Technical Outlook[/B]
A 4th wave triangle is complete and expectations are for an upside break through 1.4340 and then 1.4720. The move may occur with 1.4118 remaining intact, which is where a small second wave could be complete. Failure to hold that level would expose potential Fibonacci support at 1.4030.
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[I]To discuss this report contact John Rivera, Currency Analyst: <[email protected]>[/I]
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