One of the most important factors in fundamental analysis is the identification of the consumer confidence level in the United States. This value is considered an indicator of economic development. He says consumers ‘ consumer behaviour beforehand. If this value is seen in relation to the euro area, a trend can be derived for the EUR/USD currency pair.
Determination of the value
At the end of the 70s year, the University of Michigan has asked for a monthly minimum 500 households in determining the consumer price index. The index provides information on the consumer’s assessment of the current and future expectations of consumer spending. Declining consumer confidence is a sign of weaker consumer spending.
Consumers provide answers to more than 50 questions about the current financial situation of their own household and the period of one current year. The respondents also assess the expectation of the economic climate in one and within the next five years. Questions about your own buying behaviour are also asked. The assessment of the current situation and future expectations will ultimately be weighted at 40% to 60%. Preliminary data will be announced around the middle of the month, while the final data will be delivered on the last Friday of the month.
A positive development is currently being undertaken. If the euro area cannot come up with similarly good results, the US dollar will be strengthened and the corresponding impact on the currency pair. Profits could then be generated at a falling rate. If there are surprises in the high, then quite big profits can be achieved. In practical terms, this means that there are not only huge chances of winning but there is also the likelihood that the trader will have to provide sufficient capital to be able to sit against movements.
Consumer confidence in the United States and the currency pair EUR/USD and others
Should a positive value be announced, it would have an impact on other currency pairs and on commodities. The trader should pay special attention to precious metals and oil. Currency pairs such as USD/yen, USD/CHF and GBP/USD also earn the trader’s attention. Even traders who have Dow Jones and Dax in their “assortment” can earn money with these two values.
In conclusion, the trader should note the two dates of the month and also observe the news situation in advance. Especially with such a large economy as that of the USA, increased buying behaviour has a huge impact on the economy and thus on the value of the currency.