When is the US February PCE Price Index and how could it affect EUR/USD?

US PCE Price Index Overview

Thursday's US economic docket highlights the release of the February Personal Consumption Expenditure (PCE) Price Index, scheduled later during the early North American session at 12:30 GMT. The headline gauge is expected to have accelerated from 6.1% YoY in January to 6.7% during the reported month. The core reading is also anticipated to rise from 5.2% to 5.5% YoY in February and come in at 0.4% on a monthly basis, down from 0.5% in January.

How Could it Affect EUR/USD?

A strong than expected reading will reaffirm market bets that the Fed would hike interest rates by 50 bps at the next two meetings. This should be enough to push the US Treasury bond yields higher and assist the US dollar to capitalize on its intraday gains. Conversely, a softer print is more likely to be overshadowed by concerns about the Ukraine crisis and do little to dent the intraday USD bullish sentiment. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.

Eren Sengezer, Editor at FXStreet, outlined important technical levels to trade the EUR/USD pair: “On the downside, 1.1100 (200-period SMA) aligns as key support and buyers could take action in case the pair retreats toward that level. If that support fails, however, the near-term technical outlook could turn bearish and the pair could face interim support at 1.1080 (Fibonacci 61.8% retracement of the latest downtrend, 20-period SMA) before targeting 1.1040 (Fibonacci 50% retracement, 50-period SMA, 100-period SMA).”

“The first resistance is located at 1.1200 (psychological level) ahead of 1.1230 (Static level). If the pair starts using the latter as support, it could stretch higher toward 1.1270 (static level),” Eren added further.

Key Notes

  •   US February PCE Inflation Preview: Will inflation data confirm 50 bps May hike?

  •   EUR/USD Forecast: US inflation data could derail euro's rally

  •   EUR/USD fades the spike to weekly highs around 1.1180

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.