When is US 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 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.